Bitcoin’s nearly $12 billion open interest shakeout earlier this month might be just the catalyst needed for the asset to regain its upward momentum, according to a crypto analyst.

“This can be considered as a natural market reset, an essential phase for sustaining a bullish continuation,” CryptoQuant contributor DarkFost said in a March 17 markets report.

“Looking at historical trends, each past deleveraging like this has provided good opportunities for the short to medium term,” the analyst said.

CoinGlass data shows that on Feb. 20, Bitcoin’s (BTC) open interest (OI) — a metric tracking the total number of unsettled Bitcoin derivative contracts such as options and futures — stood at $61.42 billion before dropping 19% to $49.71 billion by March 4. 

Bitcoin’s open interest is sitting at $49.02 billion at the time of publication. Source: CoinGlass

It came amid volatile price swings due to uncertainty over US President Donald Trump’s imposed tariffs and the future of US interest rates.

“Following the recent panic triggered by political instability linked to Trump’s decisions, we witnessed a massive liquidation of leveraged positions on Bitcoin,” DarkFost said.

Bitcoin’s price fell below two crucial price levels during the two-week period, bringing it closer to the levels seen in the days after Trump’s election win in November.

Feb. 25 saw Bitcoin’s price retrace below $90,000, and just two days later, on Feb. 27, Bitcoin dropped below $80,000 for the first time since November. It’s now trading at $83,400, according to CoinMarketCap data.

Bitcoin is down 14.58% over the past 30 days. Source: CoinMarketCap

Bitget chief analyst Ryan Lee recently told Cointelegraph that with Bitcoin hovering in the low $80,000s, its price and OI could see more volatility if the March 19 Federal Open Market Committee meeting delivers any surprises.

“The market largely expects the Fed to hold rates steady, but any unexpected hawkish signals could put pressure on Bitcoin and other risk assets,” he added. 

Related: Bitcoin experiencing ‘shakeout,’ not end of 4-year cycle: Analysts

Markets are currently pricing in a 99% chance that the Fed will keep interest rates steady, according to the latest estimates of the CME Group’s FedWatch tool.

At the time of publication, Bitcoin OI is sitting at $49.02 billion, representing an approximate 6.5% increase over the past five days.

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.