There is something interesting happening in the Bitcoin market right now. Deleveraging is underway, but this is not an acute crash like the ones we usually see before a cyclical bottom forms. It’s more like a gradual adjustment that is causing many traders to start worrying.

Data from CryptoQuant shows some key metrics we need to watch. First, the CME Bitcoin basis has been continuously compressing since the beginning of this year. For those unfamiliar, this basis reflects demand for long leverage in the futures market. This yield curve has a historically interesting pattern—before the 2019 and 2022 bear markets, it also experienced similar compression.

But here’s an important nuance. Although the curve currently shows a decline, its slope is still positive. This means leverage demand is weakening, but it has not yet reached the backwardation condition that usually signals market capitulation. Long-term contracts are still trading at a premium, just with a smaller premium. This confirms that what’s happening is a gradual deleveraging, not panic selling.

The second metric to watch is CME Bitcoin futures open interest. This number has already fallen 47% from its peak this year. The comparison is interesting—similar declines occurred in 2022, before the market found its bottom. Such a decrease in open interest reflects prolonged liquidations and weakening speculative demand.

The combination of basis compression and declining open interest paints a clear picture: the market is in a consolidation phase, not a terminal phase. There are no signs of definitive capitulation that typically mark a new cyclical bottom. This means Bitcoin still has room to fall further before market conditions truly reach a saturation point.

So what are the implications? If the same cyclical pattern repeats, we might still be waiting for more aggressive selling momentum before the cyclical bottom forms. The data indicates an ongoing adjustment process, not the end of the bear story. Traders should remain vigilant for signs of backwardation emerging—this will be an indicator that acute deleveraging is near, and the cyclical bottom may be just around the corner.