Bitcoin futures traders who opened short positions above $70,000 are at risk of liquidation after a significant deleveraging event. Data from researcher Axel Adler Jr. shows a sharp contraction in market open interest, while funding rates turned negative, indicating increased short-side pressure. Analyst Michaël van de Poppe points to multiple long-term valuation metrics at historic lows, suggesting that nearly 90% of the potential downside may already be priced into the current market.
Bitcoin futures data indicates a market reset after a weekend of significant deleveraging. Traders who initiated new short positions above $70,000 could now face liquidation risk as open interest contracted sharply.
According to data analyzed by researcher Axel Adler Jr, the weekly change in aggregate Bitcoin futures open interest flipped from an 8.9% increase on March 31 to a -7.2% contraction by April 4. The seven-day change stood at -2.46% on Monday, with total open interest near 318,000 BTC.
The shift into negative territory suggests a broad leverage reset, where long positions were closed without crashing the price. Concurrently, the seven-day average funding rate across major exchanges turned negative, signaling growing short-side bias.
Negative funding rates mean sellers are paying buyers to hold positions, creating pressure on shorts if the price remains stable. This setup indicates long positions exited first, followed by shorts stepping in.
Separately, MN Capital founder Michaël van de Poppe pointed to three long-term indicators at extreme lows. The Puell Multiple Z-Score is at its lowest in a decade, while the Spent Output Profit Ratio (SOPR) and Market-Value-to-Realized-Value (MVRV) Z-Scores have hit record lows.
Van de Poppe stated, “For sure, markets can tumble and sweep the lows for liquidity, but I don’t think we’ll see much more downside in the markets, or at least 90% of the downside is already captured.” These metrics suggest widespread profit realization has cooled and a potential exhaustion phase.
