Why Bitcoin’s Recent Recovery Is Being Called ‘Structurally Healthy’

Bitcoin (BTC) has managed to climb back well above the $90,000 level as risk appetite returned to the crypto market. New data now suggest that the rally is being driven primarily by spot demand rather than aggressive leverage.

Experts say that this is a structurally healthy dynamic.

BTC Enters “Moderate Expansion”

According to a report by crypto analyst Axel Adler Jr., Bitcoin has transitioned into what Adler describes as a “moderate expansion” phase following a period of heavy deleveraging in December. This is reflected in the composite derivatives pressure index, which has moved back into positive territory after spending much of last month near or below zero.

The index, which aggregates metrics such as open interest momentum, price momentum, divergence, and acceleration using a 90-day Z-score, currently points to an improving sentiment without reaching historically overheated levels. In fact, readings remain well below the +1.5 threshold typically associated with excessive optimism, which means that the market is expanding in a controlled manner rather than entering a speculative frenzy.

At the same time, Adler also found an important divergence between BTC’s price and derivatives activity over the past week. While prices have risen, OI has grown at a slower pace, which resulted in negative divergence – an inverse of the mid-December environment, when leverage was building even as prices declined.

Such a trend indicates that traders are not aggressively chasing the rally with borrowed capital, a dynamic that has historically been associated with more sustainable uptrends. The combination of a positive composite index and negative price-OI divergence validates the narrative that spot buyers, rather than leveraged traders, are currently setting the market’s direction.

Adler explained that this structure reduces the risk of sudden liquidation cascades, which often occur when leverage accumulates too quickly. He added that a move into a stronger expansion regime would require both price and OI to break higher thresholds at the same time. Deterioration risks, on the other hand, would emerge if OI accelerates sharply without corresponding price support. For now, the market appears to be in a normal trend phase with gradual participation rather than euphoria.

Persistent Bitcoin Outflows

Beyond derivatives, on-chain supply metrics indicate a healthier market setup. As reported by CryptoPotato, Bitcoin’s supply on exchanges has fallen to its lowest level since 2018. In fact, only about 13.7% of the total supply is now held on trading platforms. Binance holds roughly 3.2% of all BTC in circulation. This indicates a long-term trend rather than a short-term move.

Moreover, fewer coins are being sent to exchanges, which means that holders are not rushing to sell. Instead, netflow charts point to steady outflows in recent weeks, particularly December 22 and January 5, which saw sizable exchange withdrawals.

The post Why Bitcoin’s Recent Recovery Is Being Called ‘Structurally Healthy’ appeared first on CryptoPotato.