Bitcoin’s (BTC) price went on a major rampage this week as it breached all-time highs (ATH) on two different occasions. While the latest ATH of $70,083.05 marks a monumental milestone, it underscores how Bitcoin is displaying an “overheating” signal, according to insights from crypto analytics platform CryptoQuant.
With the palpable excitement from investors to bet on the coin at the moment, CryptoQuant is warning that a major correction might be ahead for the top coin. The analytics platform laid out some factors that show a correction might truly be underway for the coin. It highlighted how “the Bull-Bear Market Cycle Indicator has flagged an Overheated-Bull phase as prices soared above $65K.”
#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
With the price now changing hands for $68,472.28, up by 1.7% in 24 hours, the overheating sentiment is further compounded. Bitcoin miners are also considered to be overpaid as profitability jumped to the highest level since December 2023.
In addition, CryptoQuant highlighted how traders’ unrealized profit margins have jumped to 57%. The analytics platform noted that when the range is as high as this, it is historically associated with a correction as traders are bound to take profits eventually.
How steep can Bitcoin fall?
With the alarm bell sounding, the question remains how steep Bitcoin’s price can fall with the impending correction. While CryptoQuant did not provide such insight in this current analysis, its founder and CEO Ki Young Ju revealed earlier that Bitcoin is likely not going to return to its spot BTC ETF listing price around $46,376.
He argued 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. Though Bitcoin’s price corrected from the all-time high price, it is actively in price discovery mode with the likely upside unpredictable.
As a major optimistic guidance, market experts like Samson Mow are projecting a top price of $1 million for the coin in the long term.
