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Bitcoin futures open interest has collapsed to roughly $21 billion from over $90 billion at last year’s peak, its lowest level since 2024, as the cryptocurrency trades near $68,000 — down 46% from its October all-time high of $126,200. The carnage is hitting European markets particularly hard: Amsterdam-based Deribit, the world’s largest crypto options exchange, is flashing its most extreme fear reading in years just as MiCA’s July compliance deadline forces European service providers to absorb rising regulatory costs into a shrinking market.
The Numbers Behind the Rout
CoinGlass data show aggregate Bitcoin futures open interest fell to $34 billion by mid-February, a 28% contraction in 30 days, before sliding further toward $21 billion by the week’s end. Binance accounts for roughly $6.5 billion of the remaining total, with Bybit holding $3.6 billion. Forced liquidations totaling $5.2 billion over a two-week stretch accelerated the unwind.
When measured in Bitcoin terms, open interest holds near 502,450 BTC, suggesting the dollar decline reflects price collapse rather than outright capital flight. But this distinction offers cold comfort: the total crypto market capitalisation has shed over $1.2 trillion since mid-January 2026, and Bitcoin has erased nearly half its value from the $126,200 peak set in October 2025.
Historic Capitulation Signal
CryptoQuant analysis shows seven-day average realised net losses have surged to $2.3 billion — ranking among the three to five worst capitulation events ever recorded. The scale compares directly to the 2021 crash, the 2022 Terra and FTX collapses, and the mid-2024 correction. CryptoQuant researchers note Bitcoin’s realised price stands at $55,000, a level historically associated with bear-market bottoms, with previous cycles seeing prices trade 24% to 30% below that threshold before stabilisation.
The 46% drawdown from the all-time high already rivals the 52% crash of March 2020 during peak COVID-19 fears — the very comparison this sell-off was supposed to be too mature to repeat.
Deribit Signals Extreme Fear
The bearish signal most visible to European traders comes from Deribit, the Netherlands-headquartered exchange that dominates global crypto options. The 30-day Bitcoin options delta skew — the premium traders pay for downside protection — surged to 22%, far beyond the -6% to +6% range that indicates balanced sentiment. Put options are trading at a sharp premium to calls, meaning professional traders are actively paying up to hedge against further declines.
Bitcoin futures funding rates have remained below the 12% neutral annualised threshold for four consecutive months, confirming persistent reluctance to take leveraged long positions. While funding briefly recovered from negative territory earlier in February, bears retain their structural advantage across derivatives markets.
MiCA Squeeze Compounds the Pain
European crypto service providers face a uniquely difficult environment. MiCA’s full compliance deadline of July 1, 2026, requires all Crypto Asset Service Providers to secure authorisation from national regulators or cease operations across the EU. A study by Dutch trading firm Yieldfund found that 42% of CASPs report a 45% increase in costs linked to MiCA preparations — licensing fees, operational restructuring, AML/KYC systems, and mandatory asset segregation.
These compliance costs are hitting as trading volumes collapse and revenue shrinks. From March 2026, electronic money token custody and transfer services may require both MiCA authorisation and separate payment services licenses under PSD2, effectively doubling regulatory overhead for stablecoin operators. Major stablecoins including USDT remain non-compliant with MiCA, forcing European exchanges to delist them and fragmenting liquidity at precisely the worst moment. Spain began enforcing MiCA and DAC8 tax reporting from January 2026, with several other member states already past their grandfathering windows.
Macro Headwinds and Market Divergence
Weaker-than-expected US labour market data has compounded the downturn. The Department of Labor revealed the American economy created only 181,000 jobs in 2025, below previously reported figures. The Federal Reserve held rates steady at 3.5–3.75%, reducing bets on aggressive easing and contributing to the rotation away from high-risk assets.
Bitcoin’s weakness contrasts sharply with traditional markets. Gold has recovered to the $5,000 psychological level, while the S&P 500 trades just 1% below its all-time high. This divergence frustrates the store-of-value narrative and raises questions about whether Bitcoin’s 2025 rally to $126,000 — fuelled by post-election euphoria — was a positioning event rather than a structural revaluation.
Institutional Signals Are Mixed
The picture is not uniformly bearish. US-listed spot Bitcoin ETFs still average $5.4 billion in daily trading volume, contradicting claims that institutional demand has vanished. However, ETF flows have turned negative, with over $6 billion in outflows across the past four months bringing cumulative net inflows down to $54 billion. Longer-term allocators appear to be holding, while leveraged and tactical traders have exited aggressively.
For European traders navigating both a market rout and a regulatory revolution simultaneously, the question is whether Bitcoin can defend the $60,000 support zone — its lowest print this year — without triggering the kind of cascade that would test CryptoQuant’s $55,000 realised price floor. The next Federal Reserve policy window and the approaching MiCA deadline will determine whether this is an orderly reset or the beginning of something worse.
