Excessive leverage in the cryptocurrency market has largely disappeared, a development analysts believe could pave the way for a healthier recovery driven mainly by spot trading.
Ongoing global tensions, especially the conflict between Iran and the United States, have shaken crypto markets and reduced investors’ appetite for risk.
According to CryptoQuant analyst Darkfost, periods of geopolitical uncertainty usually discourage aggressive trading behavior. This trend is reflected in the sharp decline of Bitcoin’s Estimated Leverage Ratio on Binance.
The indicator tracks how heavily investors rely on leverage. It is calculated by comparing futures Open Interest with the amount of Bitcoin reserves held on the exchange. Since February, the ratio has dropped significantly from 0.198 to 0.152. During the same period, Bitcoin’s price fell from about $96,000 to roughly $69,000.
Signs of a Healthier Market Structure
If the leverage ratio stays low while Bitcoin continues to consolidate, it may indicate that spot buying is replacing leveraged speculation as the primary force behind price movement. Analysts generally view this as a healthier market structure.
Lower leverage reduces systemic pressure across the market. This can help stabilize price action before a new directional trend begins.
In a separate analysis, another CryptoQuant analyst known as IT Tech noted that the number of traders attempting to call the market bottom is increasing. One indicator has remained in the distress zone for 29 consecutive days. The analyst highlighted the Bitcoin long term holder to short term holder SOPR ratio, which currently stands at 0.89.
This suggests that many recent buyers are holding positions at a loss. Long term holders are not selling in large quantities, but they are also not absorbing supply. Short term holder capitulation appears to be building, although it has not yet reached extreme levels. For this reason, the analyst believes it is too early to declare a definitive market bottom.
Data from Glassnode also indicates that market momentum has improved slightly. The Relative Strength Index has recovered from recent lows, although price action still lacks the strength needed to confirm a decisive bullish trend.
Spot trading activity remains relatively quiet. Lower trading volumes suggest that market participation is still limited even as conditions begin to stabilize.
Outlook for the Crypto Market
The broader crypto market has gained about 4.3 percent over the past day, pushing total market capitalization to approximately $2.46 trillion. The move followed comments from US President Donald Trump suggesting that the conflict with Iran could end soon.
Bitcoin climbed back above $70,000 during early trading hours in Asia on Tuesday. At the same time, oil prices dropped sharply, falling 28 percent from Monday’s peak of $120.
Ether remained relatively weak but continued to hold above the $2,000 level at the time of writing. Meanwhile, several altcoins recorded stronger gains. Hyperliquid and Zcash both surged by more than 11 percent.#crypto#cryptonews https://t.me/coinsignalpublic https://coinsignals.net
