Bitcoin Shows Signs of Healthy Accumulation Despite Correction Warning

Bitcoin on-chain data suggests that the market is entering a healthy accumulation phase, with investors steadily buying the asset.

However, a CryptoQuant author warns that high levels of leverage in the market could still trigger a sharp price correction.

Notably, Bitcoin is up 1.8% over the past week, trading at $64,200, though it remains 49% below its all-time high.

In a post, CryptoQuant’s TopNotchYJ said that Bitcoin’s speculative momentum from the 2025 bull market has shifted into a “structural consolidation phase”. According to him, institutional investors are gradually accumulating Bitcoin, rather than short-term traders driving price movements.

SOPR and Exchange Reserves Signal Steady Accumulation

TopNotchYJ said Bitcoin’s aggregate Spent Output Profit Ratio (SOPR) has remained close to 1.0. This indicates that buying and profit-taking are relatively balanced, rather than showing signs of panic selling.

The market observer also pointed to Bitcoin’s declining exchange reserves. Specifically, more BTC is moving into ETFs and institutional custody instead of remaining on exchanges for trading. This decline in available supply points to growing long-term demand.

TopNotchYJ added that Bitcoin’s Estimated Leverage Ratio (ELR) and overall open interest have dropped significantly from earlier highs, reducing the risk of major liquidation events.

While funding rates remain slightly positive, indicating continued demand for long positions, the lack of major exchange inflows suggests that large investors are no longer selling aggressively.

Essentially, these indicators show that Bitcoin is in a healthy accumulation phase, with long-term demand becoming a larger market driver than speculative trading.

High Leverage Could Trigger Correction

Separately, fellow CryptoQuant author Crazzyblockk shared a more cautious outlook, warning that Bitcoin’s leverage levels remain unusually high. He noted that BTC Exchange Leverage Pulse, which compares exchange open interest with stablecoin reserves, shows that the use of borrowed funds is increasing much faster than available spot liquidity. This could leave the market vulnerable to a sharp deleveraging event.

Crazzyblockk noted that leverage has risen to one of its highest levels on record, ranking within the top 5% of historical readings, and remains well above its long-term average. This suggests that the current rally is being driven more by borrowed capital than by fresh spot buying.

The analyst warned that if stablecoin reserves remain too low to absorb selling pressure, the market could experience a sharp wave of liquidations to restore balance.

Two Different Views on Bitcoin

Essentially, the two CryptoQuant analysts interpret the market differently. TopNotchYJ believes Bitcoin is in a healthy accumulation phase, supported by lower leverage, declining exchange balances, and stable on-chain data.

Crazzyblockk disagrees, arguing that leverage remains too high compared with available exchange liquidity. In his view, this increases the risk of a sharp price correction if market conditions deteriorate.