Bitcoin Surge Sparks Overheating Concerns: CryptoQuant

Bitcoin’s meteoric rise shows no signs of abating, as the flagship cryptocurrency smashed through another all-time high, sending shockwaves of excitement and trepidation across the digital asset market.

Overheating Concerns and Long-Term Bitcoin Optimism 

According to data from CryptoQuant, the crypto analytics platform, Bitcoin’s price hit an all-time high of $70,083.05 per coin. This significant surge has stoked fears that the market may be overheating, potentially paving the way for a severe correction in the days ahead.

#Bitcoin overheating signals and correction risks that shouldn't be overlooked

Despite the bullish momentum, several indicators signal potential overheating. Let's dive into them

— CryptoQuant.com (@cryptoquant_com) March 8, 2024

Investors are excited about Bitcoin’s notable performance, but Ki Young Ju, founder and CEO of CryptoQuant, said, “Our indicators are flashing warning signs of an overheated bull market.” Since prices exceeded $65,000, the Bull-Bear Market Cycle Indicator has shown that the market is in an Overheated-Bull phase.

CryptoQuant’s research shows that several factors could cause a sharp drop in Bitcoin’s value. One reason is that miners’ profits have reached their highest level since December 2023, suggesting they may want to sell their holdings and take the profits. 

Bitcoin Miner Profits – yCharts

Additionally, traders’ unrealized profit margins have surged significantly up to 57%, a threshold historically associated with imminent corrections as investors rush to cash out.

CryptoQuant didn’t give any specific predictions, but Young Ju had earlier said that Bitcoin isn’t likely to go back below $46,376, the BTC price when it got listed as an exchange-traded fund (ETF). He did this by comparing it to how the gold market behaved after its ETF debut.

Young Ju explained that Gold never traded below its ETF listing price of $444, and if the precedent were to be followed, then Bitcoin might also not drop below the listing price.

Many experts say that Bitcoin’s long-term chances are still bullish, even though it might be volatile in the short term. A well-known crypto enthusiast, Samson Mow, has predicted that the digital asset could reach $1 million per coin, underscoring the immense upside potential.

My main prediction is the run up to $1M happens in days to weeks. Starting point TBD.

— Samson Mow (@Excellion) January 14, 2024

Disclaimer

This article is provided for information only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.