Bitcoin has shown signs of a swift recovery recently, but a closer look reveals a more complicated reality. Despite the uptick in price, the overall outlook for the flagship cryptocurrency remains bearish. A new on-chain analysis suggests that Bitcoin's recent bounce may merely be a temporary adjustment within a broader downtrend, heavily influenced by macroeconomic conditions.

In a report by XWIN Research Japan, an educational group focusing on cryptocurrency, several factors are highlighted that indicate the Bitcoin market is in a 'post-rebound adjustment' phase rather than gearing up for a full-fledged recovery. One of the key points raised is the recent rate hike by the Bank of Japan (BoJ), which increased rates by 0.75%. Although this move was largely anticipated, it did not bolster the Japanese yen as expected. In fact, the yen remains weak, which deviates from historical trends where a weak yen typically spurred 'yen-funded carry trades.'

These trades involve Japanese investors borrowing yen to invest in higher-yield assets, including cryptocurrencies. However, XWIN Research Japan notes that the current scenario does not align with this historical behavior. Their analysis leans on the Bitcoin: Estimated Leverage Ratio metric, which tracks traders' leverage in the futures market compared to Bitcoin held on exchanges. They've observed a noticeable decline in this leverage ratio, suggesting that risk-taking is more contained than it has been in the past.

Moreover, even amidst Bitcoin's recent price fluctuations, there has been no recovery in leverage, indicating that traders are not increasing their risk exposure. This leads to the conclusion that the anticipated surge in risk appetite driven by yen-funded trades is currently absent.

Another critical indicator for assessing market sentiment is the Coinbase Premium Index. This metric measures the difference between Bitcoin's price on Coinbase, a U.S.-based exchange, and global exchange averages. The index has shown some recovery from deep negative levels but is still far from indicating a strong bullish sentiment. Rather than signaling renewed buying interest, the easing selling pressure merely suggests that U.S. spot investors remain hesitant to enter the market.

XWIN Research Japan concludes that the ongoing weakness of the yen combined with a lack of sustained spot buying indicates that the current price recovery does not reflect a structural uptrend. For a more optimistic scenario to unfold, the Coinbase Premium Index would need to recover to positive territory while prices rise—without an influx of new leverage. If these conditions align, it could signal a genuine demand-driven accumulation phase.

As it stands, Bitcoin's price is currently at $88,034, reflecting a minor loss of 0.84% in the last 24 hours, according to CoinMarketCap. The market remains complex, and investors are urged to remain cautious. The interplay of macroeconomic factors, particularly the state of the Japanese yen and leverage trends, will be critical in shaping Bitcoin's trajectory in the near future.

The situation remains fluid, and while there is potential for recovery, the signs are not yet convincing enough to suggest a change in the bearish trend. Investors should keep a close eye on these indicators as they navigate the current landscape of cryptocurrency trading.