Bitcoin’s 10% Monthly Slide: Leverage Unwinds, Stabilization Ahead?

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Bitcoin’s monthly returns are like my diet-full of wild ups and inevitable crashes, all while I’m convinced I’ve found a loophole. This time, though, the crash feels more like a betrayal.

Periods of consecutive monthly losses, notably in 2014 and again in 2018, marked the unwind of overheated rallies rather than structural failure. Recent weakness follows the same pattern, which is just a fancy way of saying, “Hey, remember that time we all lost our minds and now we’re paying the price?”

As Bitcoin [BTC] reached a new all-time high in October 2025, the results in the monthly returns contradicted the performance. Because nothing says “success” like hitting a record high and then immediately forgetting it ever happened.

This was a result of tighter global liquidity, shifting ETF flows, and restrictive monetary conditions reducing marginal demand, thereby translating to negative returns in the same month. In other words, the world’s central banks decided to play musical chairs with money, and Bitcoin lost the game.

At the same time, profit-taking has weighed on short-term performance. Nothing like selling your gains and then watching the market rise while you eat humble pie for dinner.

Historically, Bitcoin delivered its strongest returns in 2013, 2017, and 2020-2021, while the weakest years followed speculative excess. Classic. The usual suspects, like my exes, always showing up when you least expect them.

Recoveries typically emerged through consolidation, lower leverage, and renewed spot accumulation. Basically, Bitcoin takes a nap, everyone lowers their bets, and then slowly creeps back like a guilty toddler.

That recovery path remains viable under current conditions. This is because leverage is resetting. Or, as I like to call it, “The Great Crypto Reset: Now With 30% Less Overconfidence!”

Prolonged negative monthly returns typically coincide with forced deleveraging. Once that process matures, downside pressure weakens as marginal sellers exit. In crypto-speak, that means people stop panicking and start Googling “how to sell without crying.”

Market deleveraging accelerates amid Bitcoin’s volatile decline

According to CoinGlass, liquidation data indicates a period of intense market stress. As of press time, more than $5 billion in crypto positions were liquidated over the last four days. That’s like my bank account after a Black Friday shopping spree.

This marked the largest liquidation event since the 10th of October 2025, with long liquidations exceeding $2.5 billion on peak days. If this were a movie, it’d be called The Great Crypto Crash of 2026: And Also Maybe Tomorrow.

As liquidations increased, Bitcoin’s price declined alongside them, showing a strong relationship between forced selling and price weakness. It’s like a toxic relationship where both parties are equally miserable.

Similar patterns appeared in mid-November and early December, both followed by sharp price drops. Coincidence? I think not. More like crypto’s version of Groundhog Day, but with fewer groundhogs and more existential dread.

Bitcoin recently fell below $80,000 to about $77,700, triggering $1.6 billion in weekly liquidations. It’s like the stock market’s version of a midlife crisis-just more zeros.

A rebound toward $80,000 could liquidate $1 billion in short positions, potentially driving a short squeeze, although elevated leverage keeps market risks balanced. Or, as I prefer to call it, “The Great Short Squeeze: Now With 50% More Panic Buttons!”

Deleveraging resets market structure

Bitcoin’s price decline now moves alongside a clear drop in Open Interest. As the price slipped toward $77,500, Open Interest dropped from about $47.5 billion to nearly $24.4 billion, indicating a reduction in leveraged positions. Traders are clearly reducing exposure, which is code for “we’re all panicking but trying to look cool about it.”

In previous cycles, similar declines in both price and Open Interest appeared during late stages of deleveraging and often led to periods of consolidation. Think of it as crypto’s version of a group therapy session-everyone’s there, no one’s talking, and someone brought snacks.

Market structure remains weak as sentiment cools. Selling pressure persists, yet lower leverage points to growing fatigue. It’s like a bad dating profile-everyone’s trying to leave, but no one wants to be the first to say “I give up.”

All in all, the market now sits between further downside risk and the potential for stabilization once positioning resets. Or, as I like to call it, “The Great Crypto Wait-and-See Game: Will You Cry or Cash Out First?”

Final Thoughts

  • Bitcoin’s drawdown mirrors past post-rally corrections, where tightening liquidity and profit-taking triggered deleveraging rather than structural breakdown.
  • Heavy liquidations and collapsing Open Interest show leverage is resetting, leaving the market balanced between further downside and stabilization.

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2026-02-03 07:04