Bitcoin’s Recent Surge: Unpacking the Structural Shifts Behind the Rally
Bitcoin ETFs have raised $1.2 billion in the first two trading sessions of 2026, coinciding with BTC’s surge to $94,000, up 7% in just a few days. The narrative wrote itself: Institutional money flooded in, prices followed. However, this correlation masks a more complex structural shift that is playing out across options markets, on-chain flows, and derivatives positioning, suggesting that the basis of the rally lies deeper than just spot demand alone.
Pay for Convexity
Jeffrey Park, CIO at ProCap BTC, noted that the Bitcoin options call skew was positive on January 1 for the first time since October. It revealed a signal that institutional traders watch more closely than AUM levels: the cost of hedging upside versus hedging downside. Call skew measures the difference between the implied volatility of out-of-the-money calls and that of comparable puts, typically expressed as a 25 delta risk reversal.
When this spread becomes positive, traders bid more aggressively for upside potential than for downside protection. The market demands a premium for one-way convexity, which acts as a live vote on where participants expect a price breakout. A positive call skew reflects actual demand for upside leverage, such as positioning institutions for breakouts, retail chasing momentum, or structured products needing call inventory.
The mechanical effect reinforces this: When traders sell these calls, they hedge by buying spot or futures when prices rise, creating a feedback loop that reinforces rallies. January’s Bitcoin options change didn’t just reflect sentiment; it has reshaped the derivatives landscape so that bullish moves are self-amplifying through delta hedging flows.
Supply Redistribution and Leverage Dynamics
Checkonchain looked at the January 5 rally from a different angle, noting that “there is a massive supply reallocation happening under the hood.” Top-heavy supply fell from 67% to 47%, while profit-taking gradually declined from 30,721 BTC on November 23rd to just 3,596 BTC on January 3rd.
The market didn’t just rise, it rebalanced, with concentrated holders distributing distributions to buyers willing to take in the supply without making immediate profits. If profit-taking slows as prices rise, it suggests that new entrants with longer time horizons are accumulating. The decline in realized profit removes the sell-side pressure that typically limits rallies.
Recent buyers entered at prices closer to current levels, creating a cohort that had less incentive to exit at marginal gains. According to Checkonchain data, BTC-denominated realized profit fell from 30,721 BTC on November 23rd to 3,596 BTC on January 3rd.
The futures market added another layer. CoinGlass data showed $530 million in liquidations in 24 hours, including $361 million from short selling, a classic short squeeze supporting the recent rally. However, the squeeze occurred in a low-leverage environment.
Low Leverage Environment
Checkonchain data shows that crypto-native leverage fell from 5.2% to 4.8% between December 31 and January 5, while global leverage fell from 7.2% to 6.6%. Futures leverage increased slightly to 3.3%, but remained well below historical highs. When short positions come under pressure in a low leverage environment, unwinding removes resistance without creating systemic fragility on the long side.
The absence of excessive leverage means the rally is not based on borrowed capital that would have to be liquidated at the first sign of weakness. Spot rallies do not have the same reflexive deleveraging risk as futures-heavy moves. According to Checkonchain data, the crypto-native leverage ratio fell from 5.2% to 4.8% between December 31st and January 5th.
The interplay between the mechanisms of repricing upside risk through call skew, consolidation of supply into stronger hands, and continued compression of leverage creates an environment in which catalysts such as ETF inflows reinforce the move rather than initiate it. The ETFs provided a narrative anchor and liquidity entry point, but the structural conditions that allow prices to sustain gains were already in place.
Bitcoin’s break above $94,000 marked the convergence of several structural indicators that suggest there is more conviction behind the move than spot flows alone would suggest. For more information, visit https://cryptoslate.com/bitcoin-ripped-to-94000-as-critical-metric-quietly-turned-positive-for-first-time-since-october/
