There has been drawdowns of Bitcoin futures contracts over the past few days, with open interest worth $1.25 billion, and analysts say it’s a good thing for the BTC derivatives market.
Open interest Bitcoin Futures contracts have fallen steadily every day since Tuesday afternoon before sinking to $85 billion to $80.8 billion since Tuesday afternoon, according to Crypto Data Aggregator Coinglas.
“The flash is likely to be a healthier reset than a bearish warning at this stage, purging excessive leverage, stabilizing speculative positioning and maintaining key support for BTC,” said Coinbit Chief Executive Jean-David Péquignot. Decryption.
Analysts at Exchange Bitfinex agreed that there is no reason to worry yet. They said Decryption Investors should consider the current market situation as “a temporary cooldown following the volatility peak that has generated some major liquidation.”
Deribit’s Péquignot stated whether this recent cut actually works as a reset depends on the clarity of the macroeconomic and price stabilization. “If you can’t retain support, your emotions may be weakening,” Pequinaud warned.
However, the macroeconomic outlook is still vague.
In a speech earlier today to the Greater Providence Chamber of Commerce in Rhode Island, Federal Reserve Chairman Jerome Powell sounded less wary about tariffs than he did earlier this year. However, Powell did not provide many clues about the remaining two meetings of the Federal Open Market Committee.
“We have not yet seen the overall economic impact of significant changes in trade, immigration, fiscal and regulatory policies,” he said. “A reasonable basic case is that the tariff-related impact on inflation is relatively short-lived, which is a one-off change in price levels.”
Powell said the Federal Open Market Committee is facing a disastrous task to balance the effects of inflation and the falling interest rates on the job market.
“Our policy is not in the preset course,” he said. “We will continue to determine the right stance based on incoming data, evolving outlook and balance of risk.”
Investors are waiting for the printing of their next consumer spending from the Bureau of Labor Statistics on Friday morning. Analysts expect data in August to expect consumer prices to rise 2.7% in August, up from 2.6% in July. Dow Jones Newswire and Wall Street Journal.
According to Crypto Price Aggregator Coingecko, Bitcoin was recently trading at $111,904, about 0.7% lower than yesterday. BTC has been off more than 4% over the past week.
“Funding rates are still in normal range, liquidation is normalized and it’s a classic sign that risk is being washed away,” Bitfinex analysts said. “We don’t see any signs of structural change until we see huge spot sales and exchange drawers.”
Péquignot said that low trading volume means BTC investors need to proceed with caution, but the good news from PCE prints could set a stage for Bitcoin recovery.
“Dovish Signals can drive BTC to $120,000, but Hawkish Tones could retest $110,000,” he said. “With the bullish seasonality approaching October, this retreat may pave the way for a V-shaped recovery, but vigilance is the key to avoiding even volatility traps.”
