Bitcoin ETFs gained $1.2 billion in the first two trading sessions of 2026, coinciding with BTC’s rise of 7% to $94,000 in just a few days. The story itself is that institutional money flooded in and prices followed suit.
But that correlation masks more complex structural changes unfolding across options markets, on-chain flows, and derivatives positioning, suggesting that the basis for the rally is deeper than spot demand alone.
pay the price for convexity
ProCap BTC CIO Jeffrey Park reported on January 1 that Bitcoin option call skew turned positive for the first time since October. He identified a signal that institutional traders monitor more closely than total assets under management: the cost of upside protection versus downside hedging.
Call skew measures the difference between the implied volatility of an out-of-the-money call and the implied volatility of an equivalent put, and is typically expressed as a 25 delta risk reversal.
When this spread turns positive, traders will aggressively bid for upside exposure over downside insurance. The market charges a premium for one-way convexity and acts as a live vote on where participants expect the price to break.
A positive call skew reflects real demand for upside leverage, such as financial institutions positioning for a breakout, retailers chasing momentum, and structured products requiring call inventory.
Mechanical effects make this even worse. When dealers sell these calls, they hedge by buying spot or futures as prices rise, creating a feedback loop that amplifies the rebound.
The reversal of Bitcoin options skew in January is not just a reflection of sentiment. We have restructured the derivatives landscape in such a way that the upward movement is self-reinforcing through delta hedge flows.
Redistributing supply and leveraging dynamics
On January 5, CheckonChain looked at the rally from a different perspective, pointing out that “a massive redistribution of supply is happening behind the scenes.”
Top-heavy supply fell from 67% to 47%, while profit taking gradually collapsed from 30,721 BTC on November 23rd to just 3,596 BTC by January 3rd.
The market wasn’t just going up. The balance was being rebalanced, with concentrated holders distributing supply to buyers willing to absorb it without immediate profit.
The evaporation of profit taking while prices rise suggests that new entrants are accumulating over a longer period of time.
The reduction in realized profits removes the pressure on the seller side that normally suppresses appreciation. Recent buyers entered at prices close to current levels, creating a demographic with less incentive to exit with small profits.
The futures market has added a new layer. According to CoinGlass data, $530 million was liquidated in 24 hours, of which $361 million was due to shorts, a classic short squeeze that has helped fuel the recent rally.
However, this squeeze occurred in a low leverage environment. According to Checkonchain data, between December 31st and January 5th, crypto-native leverage fell from 5.2% to 4.8%, while global leverage fell from 7.2% to 6.6%. Futures leverage rose slightly to 3.3%, but remains well below its historic peak.
If shorts become stressed in a low-leverage regime, unwinding removes resistance without creating systemic vulnerability on the long side.
The absence of over-leverage means bull markets are not built on borrowed capital that must be deleveraged at the first sign of weakness. A cash-driven rally does not face the risk of reflexive deleveraging as a futures-heavy move does.
The interplay between the mechanisms of call skew that reprices upside risk, supply that consolidates into stronger hands, and leverage that remains compressed creates a setup where catalysts like ETF inflows amplify rather than initiate moves.
ETFs provided a narrative anchor and a liquidity entry point, but the structural conditions were already in place to sustain price appreciation.
Bitcoin’s breakout above $94,000 showed the convergence of multiple structural indicators suggesting stronger conviction behind this move than spot flows alone indicate.