Bitcoin Pullback After $110K Breakout: Open Interest Decline Signals Possible Further Drop

Bitcoin Pullback After $110K Breakout: Open Interest Decline Signals Possible Further Drop

Bitcoin Faces Pullback After Rally to $110K: What the Data Says About Market Sentiment and Future Price Action

Over the past 24 hours, Bitcoin (BTC) made headlines by breaking out from a period of consolidation and reclaiming the psychologically significant $110,000 level. However, this bullish momentum was short-lived, as BTC retraced slightly to settle around $109,162, sparking discussions among analysts and traders about what lies ahead for the leading cryptocurrency.

CryptoQuant analyst Axel Adler has raised caution flags, pointing to Bitcoin’s Open Interest (OI) and other market indicators that suggest a potential further decline in price. Let’s take a deep dive into the data driving this sentiment and explore the possible scenarios for Bitcoin’s near-term price trajectory.

Significant Drop in Bitcoin Open Interest: What It Means

Bitcoin’s Open Interest — the total value of outstanding futures contracts — has seen a steep decline of approximately $1 billion in recent hours, signaling a large-scale unwinding of leveraged positions.

• This drop suggests that traders who had previously bet on Bitcoin’s price movements with leverage are now exiting their positions, reducing overall market risk.

• Such a decline in OI is typically bearish, as it reflects decreasing speculative interest and the removal of “fuel” that could otherwise push prices higher.

The shrinking Open Interest coincided with a negative net taker volume, which is a clear sign of seller dominance in the market. This pressure likely contributed to the price pullback from the $110K peak.

Taker Buy Sell Ratio and Spot Market Profit Realization

Further evidence of bearish pressure is seen in Bitcoin’s Taker Buy Sell Ratio, which recently dipped into negative territory for the first time in four days.

• A negative Taker Buy Sell Ratio means that market sellers are dominating taker orders, indicating more aggressive selling activity.

• Meanwhile, Bitcoin’s spot Cumulative Volume Delta (CVD) remained positive, signaling that investors in the spot market are realizing profits by selling into the rally.

This dual dynamic — profit-taking in spot markets coupled with deleveraging in futures — paints a picture of cautious investor behavior. Traders are locking in gains after the recent surge, while leveraged traders are stepping back to manage risk.

Exchange Activity Points to Increased Selling Pressure

Exchange netflow data adds another layer to the bearish outlook. At press time, Bitcoin’s exchange netflow stood at around 1,200 BTC inflows, indicating a rise in coins moving into exchanges.

• An increase in exchange inflows often signals that holders are preparing to sell, as coins deposited on exchanges become available for trading.

• This influx, combined with profit-taking and OI reduction, suggests heightened selling pressure, which could weigh on Bitcoin’s price.

Is a Further Pullback Inevitable?

Given the current market signals, the possibility of a continued price retracement cannot be ruled out. If selling pressure persists and leveraged traders maintain low exposure, Bitcoin may face challenges holding above key support levels.

• The $107,000 support level, which previously acted as resistance, is likely to be tested if downward momentum continues.

• A failure to hold this support could see Bitcoin dip further toward the $106,000 zone, as predicted by analyst Axel Adler.

However, the outlook is not entirely bearish. If buyers step back in at these support levels and absorb the selling pressure, particularly from the futures market, Bitcoin could stabilize and reclaim the $110,000 mark.

Bullish Scenario: Reclaiming Momentum and Eyeing $112K

For bulls to regain control, they need to demonstrate strength by:

• Absorbing the sell-side pressure coming from both spot and futures markets.

• Holding support around $107K–$108K to prevent further declines.

• Pushing Bitcoin back above $110K with conviction, setting the stage for a move toward $112,000 and potentially beyond.

If these conditions are met, Bitcoin could resume its upward trajectory, benefiting from renewed investor confidence and improved market sentiment.

Summary: What Traders Should Watch

IndicatorCurrent StatusImplication

Open Interest

Dropped by $1 billion

Indicates deleveraging and bearish pressure

Taker Buy Sell Ratio

Negative

Seller dominance, increased selling activity

Spot CVD

Positive

Profit-taking in spot market

Exchange Netflow

+1,200 BTC inflows

More coins moving to exchanges, potential sell pressure

Key Support Levels

$107K and $106K

Critical zones to watch for potential bounce or breakdown

Resistance Levels

$110K and $112K

Levels bulls aim to reclaim for upward momentum

Final Thoughts

Bitcoin’s recent price action reflects a natural ebb and flow between bulls and bears, with short-term profit-taking and position unwinding creating temporary pullbacks. The decline in Open Interest and negative taker metrics point to caution, but support levels around $107,000 will be crucial in determining whether this retracement deepens or reverses.

Traders should keep a close eye on volume trends, Open Interest, and exchange flows over the next few sessions to gauge market sentiment shifts. Ultimately, Bitcoin’s ability to hold support and reclaim resistance zones will define its path forward in this volatile phase.

Dimitar Todorov publication: "Bitcoin Pullback After $110K Breakout: Open Interest Decline Signals Possible Further Drop" was written for 24crypto.news

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