This study uses BTC price, OI, funding, and liquidation data since 2025 to examine whether deleveraging can predict subsequent rebounds. The results show that rebound signals become significantly stronger when price confirmation follows deleveraging: when BTC closes higher despite a sharp decline in OI, when funding turns from negative to non-negative alongside a positive BTC return, or when BTC turns positive the day after concentrated long liquidations, average forward returns over the subsequent 1–14 days are all positive.
Therefore, an effective framework is not to buy the dip simply because individual indicators reach extreme levels, but to observe whether “pressure release + price confirmation” occurs in sequence: the former clears out vulnerable leveraged positions, while the latter indicates whether selling pressure has been absorbed by the market.
Key Takeaways:
BTC price and derivatives indicators do not consistently move in the same direction. OI reflects the amount of risk exposure remaining in the derivatives market, funding measures positioning crowding and holding costs, while liquidations capture forced deleveraging that has already occurred. No single indicator is sufficient to explain the overall market state.
Deleveraging itself is not a reliable buy-the-dip signal. Backtesting shows that average 7-day and 14-day returns following sharp OI declines were −0.68% and −0.91%, respectively; following total liquidation spikes, they were −1.25% and −2.50%. Returns were also generally negative after long-liquidation spikes accompanied by price declines, indicating that extreme deleveraging does not necessarily mark a market bottom.
Funding turning negative provides some positive information, but its standalone predictive power is limited. Average forward returns over 1–14 days after funding turned negative were all positive, with the 14-day return reaching +1.36%. However, statistical significance remained insufficient after controlling for price momentum, volatility, and trading volume, making funding more suitable as a supplementary indicator.
What truly improves rebound probabilities is “deleveraging + price confirmation.” Following OI flush confirmation, funding recovery confirmation, and liquidation rebound confirmation, average forward returns over 1, 3, 7, and 14 days were all positive. In particular, OI flush confirmation was followed by average returns of +2.00% over 3 days and +2.10% over 14 days, with a 69.2% positive return rate over the 3-day horizon.
A more effective framework is “pressure release → price confirmation,” rather than buying the dip at extreme thresholds. Falling prices, declining OI, and rising long liquidations indicate that deleveraging is underway; only when prices subsequently turn positive and OI no longer expands rapidly does it suggest that selling pressure may have been absorbed.
Discover more details today → Gate Research: Can Deleveraging Predict a Rebound? — A Time-Series Analysis of BTC Price, OI, Funding, and Liquidation Volume
Gate Research is a comprehensive blockchain and cryptocurrency research platform that provides deep content for readers, including technical analysis, market insights, industry research, trend forecasting, and macroeconomic policy analysis.
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Investing in cryptocurrency markets involves high risk. Users are advised to conduct their own research and fully understand the nature of the assets and products before making any investment decisions. Gate is not responsible for any losses or damages arising from such decisions.
Gate Team
September 11, 2026
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