Bitcoin (BTC) open interest has experienced its most significant 30-day decline of the current cycle, a development one analyst believes could establish a solid foundation for a new bullish trend. The total open interest has fallen by approximately 1.3 million BTC as the cryptocurrency’s price has slid over the past month.

According to an analysis posted on CryptoQuant, this sharp reduction in active futures contracts is part of a “cleansing phase” for the market. The cascading price of Bitcoin has triggered widespread liquidations, compelling traders to either close their positions or reduce their risk exposure. This process of deleveraging helps remove excessive speculation from the market.

The analyst, known as “Darkfost,” noted that such phases have historically been essential for forming a reliable market bottom and paving the way for a recovery. The report highlights that the last time open interest fell this rapidly was during the 2022 bear market, underscoring the significance of the current market rebalancing.

This decline in speculative activity comes as Bitcoin’s price has fallen by 20% over the last month and more than 30% since its peak of over $126,000 in early October.

Key Price Level for a Bullish Revival

Looking ahead, crypto analyst Michaël van de Poppe suggests the coming week will be decisive for Bitcoin’s trajectory. He argued that if BTC can surge back into the $90,000 to $96,000 range, the probability of a rally toward a new all-time high will increase significantly.

Van de Poppe also observed that the prevailing atmosphere of “fear and panic” often creates the best buying opportunities in the market, suggesting that the current downturn could be a precursor to a strong recovery.