Why Bitcoin’s Recent Recovery Is Called ‘Structurally Sound’

Data shows Bitcoin’s price recovery is led by spot demand, while derivatives traders remain cautious amid improving market sentiment.

Bitcoin (BTC) has managed to climb well above the $90,000 level as risk appetite returned to the crypto market. New data now indicates that the rally is mainly driven by spot demand and not aggressive debt.

Experts say this is a structurally sound dynamic.

BTC enters “moderate expansion.”

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

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

At the same time, Adler also discovered a key difference between BTC’s price and derivatives activity this past week. While prices have risen, OI has grown at a slower pace, resulting in a negative divergence – the reverse of the environment seen in mid-December, when debt burdens rose even as prices fell.

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

Adler explained that this structure reduces the risk of sudden liquidation cascades, which often occur when debt accumulates too quickly. He added that a move towards a stronger expansion regime would require both price and OI to cross higher thresholds at the same time. On the other hand, deterioration risks could arise if the 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.

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Continued Bitcoin Outflows

Beyond derivatives, supply chain metrics indicate a healthier market setup. As reported by CryptoPotatoBitcoin 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 owns approximately 3.2% of all BTC in circulation. This indicates a long-term trend rather than a short-term move.

Additionally, fewer coins are being sent to exchanges, meaning holders aren’t rushing to sell. Instead, the net flow charts indicate steady outflows in recent weeks, especially on December 22 and January 5, when significant currency withdrawals occurred.