- BTC has made a moderate recovery over the past week, hiking by 2.81%.
- Bitcoin’s Leverage Ratio declined as speculative demand cool-off while spot demand rose.
Over the past week, Bitcoin [BTC] has continued to trade sideways. In fact, as of this writing, Bitcoin was trading at $07.052 after rising by 0.22%.
Also, BTC has made considerable gains on weekly and monthly charts hiking by 2.81% and 2.89% respectively.
The recent price pump raises questions about what factors are driving it. Inasmuch, Cryptoquant analyst Dan has suggested that BTC is seeing higher institutional demand and long-term accumulation citing a decreasing Leverage Ratio.
Bitcoin’s Leverage Ratio decreases
According to CryptoQuant, Bitcoin’s Leverage ratio has declined since the 21st of November. A decrease in the Leverage Ratio suggests that Open interest (OI) was declining relative to available BTC on centralized exchanges.
Source: CryptoQuant
Historically, a lower Leverage Ratio reduces the risk of liquidation cascades thus making price action more organic rather than derivatives-driven.
Equally, OI to market cap has declined relative to prices. This drop suggests that gains on price charts are largely driven by spot demand rather than speculation.
This trend is also witnessed in the sell ratio implying that long positions are closing as the market cools off.
Source: Cryptoquant
Significantly, it’s crucial to note that CEX reserves have also experienced a sustained decline. Over this period, BTC has moved to Coinbase Prime while buying Bitcoin ETFs. When CEX reserves drop, it implies there’s less BTC available to sell. The rise in flow to Coinbase suggests that large players, especially institutions, are accumulating.
When all this market behavior comes together, it implies that Bitcoin is currently seeing a healthy market. Prices are not driven by leverage, making future rallies more sustainable.
What it means for BTC
With spot demand surging with less leverage while institutions are actively accumulating, it suggests markets are experiencing strong bullish sentiment.
Source: CryptoQuant
For example, Bitcoin’s Coinbase premium index has remained positive throughout the past week. This does not only suggest positive sentiments among U.S. investors but also increased demand by institutions.
Historically, a higher demand by institutions has played a critical role in driving prices higher.
Source: CryptoQuant
Additionally, Bitcoin’s Fund Market Premium has surged to turn positive over the past day. When this turns positive, it implies that investors are bullish with longs paying shorts to hold their positions.
This implies that longs expect prices to rise in the near term.
Source: CryptoQuant
Finally, market participants are increasingly accumulating, with outflows outweighing inflows. Exchange netflow has dropped to -2.9k, reflecting more exchange withdrawals as investors continue to accumulate.
Read Bitcoin’s [BTC] Price Prediction 2025–2026
Simply put, Bitcoin is seeing bullish momentum strengthen as both retail and large holders continue to accumulate. This market behavior suggests that BTC markets have cooled off, positioning the crypto for further gains.
If this sentiment holds, BTC will in the short term reclaim $98,127 and then attempt a breakout to $100k. Subsequently, a pullback here will see Bitcoin drop to $95,800.
