A combination of both metrics suggests that the current regime is in the middle or middle of a bearish cycle, and a definitive correction is likely to occur soon.
Current market forces point to a reset, and Bitcoin is subject to a reduction. However, leading digital assets will still form the basis of this bear cycle, despite cooling market conditions.
According to a report from CryptoQuant, metrics such as open interest and the suppression of the Bitcoin base on the Chicago Mercantile Exchange (CME) show a continuous reduction.
Too Much BTC Pain?
The underlying CME stress is a futures yield curve that shows the need for long exposure. The curve has been down since 2025, following the patterns preceding the 2019 and 2022 bear markets. However, the trend is still positive to this day. Although the current slope of the curve suggests that average demand and risk appetite are cooling, the market has not yet reached conditions historically associated with capitulations. It ensures gradual reduction, but not consent.
The compression of the yield curve currently indicates weak demand for long-term exposure, as market participants are no longer willing to pay a premium for bitcoin (BTC) exposure. This points to weakening bullish confidence and a neutral or bearish backdrop. However, long-dated contracts still trade at a lower price to spot and shorter-dated futures.
In short, the curve shows the area where price movements may face resistance until a clear cycle base is formed. The bottoms of the previous cycle were only formed when the curve of the yield curve turned negative, indicating a reversal and a large downtrend. This means that BTC still has a lot of downside to come.
A Cyclical Bottom is coming soon
More evidence that the Bitcoin market is slowly reorganizing in place instead of the major depression needed to create a future drop in open interest. This metric is down significantly from 2025, following the trend seen during the 2022 bear market.
CryptoQuant found that CME Bitcoin futures interest rates have fallen by 47%, which is similar to the 45% plunge witnessed in 2022. Such a move reflects a significant easing of available positions following a period of increased participation. This relaxation is characterized by long-term completion, reduction in the need for speculation, and low hedging activity, which ensures a continuous reduction cycle.
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The combination of declining open interest and a positive yield curve suggests that the current regime includes or is in the middle of a bearish cycle, with an outright capitulation likely to occur soon.
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