Novaque Research
Bitcoin Deleveraging, Distribution or Capitulation?
Bitcoin’s decline to approximately $62,400 contains elements of deleveraging and loss realisation, but the latest readings do not confirm a completed capitulation. Open interest fell sharply during the June sell-off and now stands near $22.4 billion, below its 100-day average. This indicates that the market removed a meaningful amount of leverage rather than carrying the entire speculative position lower. Short-term-holder SOPR repeatedly fell below 1, showing that recent buyers realised losses. However, the metric has since returned close to breakeven rather than reaching a sustained recovery regime. The latest configuration has become less constructive. Funding remains positive at approximately 0.006, exchange netflow has turned positive near 2,900 BTC, and exchange reserves have risen toward 2.72 million BTC. Together, these readings show that traders are rebuilding long exposure while more spot inventory is becoming available to sell. Bitcoin therefore faces a distribution risk even after the initial deleveraging. Fading expectations for Federal Reserve rate cuts and continued inflation concerns have contributed to ETF withdrawals and weaker demand for crypto assets. Reuters reported that Bitcoin had lost more than 27% during the year by 31 July. The next constructive signal would be a combination of negative exchange netflows, open interest staying below trend, and SOPR reclaiming 1. Conversely, a drop below $62,000, alongside rising open interest and positive funding, would raise the likelihood of another long-liquidation event.