Recent on-chain and derivatives market signals suggest that Bitcoin’s sharp price declines may be entering a cooling-off phase, particularly on Binance—the largest crypto exchange by volume.
Key divergences between price action and open interest data are painting a picture of fading bearish momentum.
Bullish Divergence Between Price and Open Interest
Bitcoin recently dropped below $113,000, marking a lower low on the price chart. However, Binance’s 24-hour Open Interest percentage told a different story, forming a higher low over the same period. This kind of divergence—where price falls but open interest decline slows—is often seen as a bullish signal.
According to a new report by CryptoQuant, such a pattern typically points to a phase of capitulation where traders are closing positions, but with decreasing urgency. In this case, it appears to have played out in two distinct waves: the first selloff occurred after BTC breached the $113K level, triggering long liquidations. A secondary wave pushed prices slightly lower to around $112,500, likely activating stop-losses or additional forced closures.
The gradual unwinding of positions through these staggered liquidations often sets the stage for trend exhaustion. When sellers run out of steam, market conditions can shift, creating room for a reversal or at least a consolidation.
Spot vs. Perpetual Price Spread Reveals Risk Aversion
Another revealing indicator is the growing gap between Binance’s spot and perpetual futures prices. At present, spot BTC is trading below its perpetual counterpart, producing a negative basis—a condition not typical of bullish market environments.
This spread is often driven by a sharp decline in open interest and sustained long position closures. In such cases, liquidity and demand in the derivatives market wane, pushing funding rates lower and disincentivizing bullish exposure.
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In healthier, optimistic markets, perpetual contracts typically trade at a premium to spot (a structure known as Contango). The current inverse setup signals a risk-off attitude, where traders are hesitant to pay more for future BTC exposure, opting instead to reduce leverage and limit downside risk.
Conclusion
Together, the divergence between Bitcoin’s price and open interest, combined with the negative spread in spot-perpetual pricing, suggest that the recent selling frenzy may be nearing exhaustion. While this doesn’t guarantee an immediate rebound, it indicates that bearish momentum could be weakening—opening the door for stabilization or a potential shift in sentiment in the days ahead.
Kosta Gushterov
Kosta has been working in the crypto industry for over 4 years. He strives to present different perspectives on a given topic and enjoys the sector for its transparency and dynamism. In his work, he focuses on balanced coverage of events and developments in the crypto space, providing information to his readers from a neutral perspective.
