Bitcoin’s Uptrend Faces Test as Open Interest Decline Hints at Fatigue

Rewritten Version:

Bitcoin retreated after briefly reaching $64,500, a two-week high, as weakening open interest and subdued spot demand raised concerns over the strength of July’s 8.4% recovery. The pullback on Tuesday marked BTC’s first decline of the month, ending its longest streak of consecutive gains since March.

Ether followed the broader market trend, slipping toward $1,770 after touching $1,830 during Monday’s move higher.

The recent crypto rebound has been largely fueled by a short squeeze that emerged in late June. Heavy bearish positioning had built up while bitcoin traded near its lowest level of the year, and as short positions were closed, BTC and other cryptocurrencies bounced from oversold conditions and extended their gains into July.

The total cryptocurrency market value has increased 8.4% since the beginning of July, reaching approximately $2.16 trillion.

Meanwhile, traditional markets showed signs of caution, with Nasdaq 100 futures falling 0.9% in early trading as equities continued to retreat from June’s record highs.

Derivatives Market Update

More than $500 million worth of leveraged crypto futures positions were liquidated over the past 24 hours, with short sellers accounting for most of the losses for the sixth straight session.

Despite bitcoin’s recent advance, futures open interest has declined to 740K BTC from 776K BTC recorded on July 3. The drop suggests derivatives traders have not increased exposure alongside the price rally. Combined with weak spot demand, including softer ETF flows and a declining Coinbase premium, the data has raised doubts about the recovery’s long-term strength.

Ether has shown a similar trend despite recently outperforming bitcoin.

Solana’s open interest has also fallen, declining to 68 million tokens from more than 76 million on June 24. The move suggests its recent 10% price gain has not translated into stronger demand for leveraged trades.

Canton Network’s CC token dropped more than 4% in the last 24 hours, while futures open interest increased by 3% to 245.59 million tokens. Negative funding rates and weak volume indicators point to rising bearish pressure.

Across the wider crypto market, many assets are showing negative open-interest-adjusted cumulative volume delta, indicating that sellers are becoming more aggressive through market orders rather than waiting with limit orders.

Volatility and Options Activity

Bitcoin’s 30-day implied volatility index (BVIV) climbed to 40%, ending a six-day decline. However, the index remains well below January’s peak near 60%, keeping the outlook relatively constructive for bulls. Ether’s volatility measure has shown a similar pattern.

Options activity on Deribit continues to reflect uncertainty, with both call and put contracts among the most actively traded positions over the past 24 hours.

On decentralized exchange Derive, a large call condor trade on HYPE suggests traders expect the token to trade within a limited range between $75 and $80 through July 24.

Altcoin Market Update

The altcoin sector continues to show mixed performance despite the broader market recovery. Tokens such as FET, KASPA, and WLD have declined, while ETHFI and LIT have posted gains of more than 30% over the past week.

WLFI was one of Tuesday’s strongest performers, climbing 4.8%, though it remains down more than 89% since launching last August.

The growing divergence among altcoins reflects a more selective and mature market, where individual token performance is increasingly influenced by fundamentals, adoption, and on-chain activity rather than broad market direction.

The CoinMarketCap Altcoin Season Index currently stands at 46/100, below last week’s peak but above May readings, when it remained around 30.