CryptoQuant’s Bitcoin “Bull-Bear” Indicator Flags Price As Overheated
04 Marzo 2024 - 10:00AM
NEWSBTC
The Bitcoin “bull-bear” indicator from the on-chain analytics firm
CryptoQuant has recently flagged the cryptocurrency’s price to be
“overheated.” Bitcoin May Be Overheated According To This Indicator
As pointed out by CryptoQuant Head of Research Julio Moreno in a
post on X, the BTC price has increased so fast that some on-chain
indicators have started to signal a potential phase of overheating.
Related Reading: Bitcoin Safe From Drops Under $60,300? On-Chain
Data Says So The first metric of interest here is the Bitcoin
Bull-Bear Market Cycle Indicator made by the analytics firm that
tracks the various phases of bull and bear markets. Here is how the
indicator has looked like over the past year: The trend in the
bull-bear indicator for the cryptocurrency | Source: @jjcmoreno on
X As displayed in the above graph, Bitcoin has been inside the
“bull” territory since the early part of 2023 and over the course
of this run, the metric has hit “overheated bull” levels during a
few different instances. From the chart, it’s visible that such
values of the indicator have previously coincided with some kind of
top in the cryptocurrency’s price. With the latest rally in the
asset, it would appear that the market has once again entered into
this territory of overheating. Another metric, the BTC “Miner
Profit/Loss Sustainability,” is also suggesting an overheated
market, according to Moreno. This indicator basically keeps track
of whether the miners are being overpaid or underpaid compared to
the fair value baseline. The value of the metric appears to have
spiked recently | Source: @jjcmoreno on X As displayed in the
chart, the Bitcoin Miner Profit/Loss Sustainability has entered
into the “extremely overpaid” zone after the price surge, implying
that a cool off might perhaps be due. Finally, the Bitcoin
short-term holders (STHs) are also sitting on large profits at the
moment, which can be another sign that things have started to heat
up. Looks like the value of the metric has been quite high in
recent days | Source: @jjcmoreno on X The STHs refer to the Bitcoin
investors who bought their coins within the past 155 days. These
holders are considered the weak hands of the sector, who may easily
sell at the sight of FUD or FOMO. As the above chart shows, this
cohort’s unrealized profits have swelled up as the Bitcoin price
has enjoyed its rally. Recently, they have achieved profit margins
upward of 45%. At any point, holders in profits are more likely to
sell their coins. As these profits rise, the probability of the
investor buckling into the allure of profit-taking also increases.
Related Reading: Bitcoin Volatility Induces $700 Million Carnage In
Crypto Futures As such, a large amount of these fickle-minded
Bitcoin investors holding significant profits means that there is a
high risk of a potential selloff taking place in the market. While
all these indicators are pointing to the cryptocurrency perhaps
being overvalued, there has still been a positive development in an
indicator. This metric is the “Inflows to Accumulation Addresses.”
The indicator appears to have spiked | Source: @jjcmoreno on X
Accumulation addresses are defined as those that have a history of
only buying Bitcoin and never of selling. At present, these HODLers
are observing an all-time high amount of inflows, which can
definitely be a bullish sign. BTC Price Bitcoin has seen the latest
continuation to its run in the past 24 hours as its price has now
broken past the $65,100 barrier. BTC has observed a sharp surge
recently | Source: BTCUSD on TradingView Featured image from
Shutterstock.com, CryptoQuant.com, chart from TradingView.com
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