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Unlike previous market rallies, the latest rebound in Bitcoin (BTC) – pushing it from a potential cycle low of $74,508 on April 6 to slightly above $100,000 at the time of writing – is characterized by healthier price movement.
The current Bitcoin rally is not showing signs of overheating
According to a recent CryptoQuant Quicktakes post by contributor avocado_onchain, last year’s BTC bull cycle – which saw the leading cryptocurrency create and break multiple all-time highs (ATHs) – was accompanied by sharp spikes in Binance market buy volume and funding rates.
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A sudden rise in funding rates has been followed twice by a price drop due to excessive heating. Overheating in this context refers to excess bullish leverage on futures markets, which drives up the costs of long positions and signals an overly aggressive market sentiment.
This chart shows these corrections caused by BTC futures with excessive leverage. Boxes 1, 2 and 3 show the sharp increase in funding rates on Binance, initially followed by price increases. Then, there were extended correction periods.
This current rally, however, appears to be different. Avocado_onchain says that Bitcoin is continuing to rebound without a high funding rate. In fact, Binance market buy volume is trending downward – as shown in box 3 of the chart – which contrasts with previous bull cycles.
Analysts argue that this is a sign of a more healthy rally. Previous bull runs had been marked by excessive funding rates, and sudden corrections which affected investor sentiment. In contrast to the previous rally, funding rates have remained relatively steady, indicating more prudent and sustainable behavior.
Despite price fluctuations on a short term basis, there has been a consistent upward trend in market volume since 2023. This is indicated by the yellow line. Analyst’s note:
It’s still not time to think about an exit. This shows that the buying mood is favorable and that there are more gains ahead. Bitcoin’s previous high is not predictable, but the current market and on-chain data are very positive.
The New ATH is Indicated by Other Indicators
BTC also shows several other positive signs, including stable funding rates as well as a healthy market purchase volume. positive signs pointing to a future new ATH (Asset Type) for the flagship digital assets.
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On-chain data, for example, shows that long-term investors are not sellingBTC is trading near the previous high of $108 786, which was recorded in January. The behavior of these investors suggests they are anticipating further upward movement.
Bitcoin is still a volatile currency, and analysts warn against expecting too much. far From experiencing a real supply shock. BTC was trading at $102,393 as of press time. This is down by 1.4% over the last 24 hours.
Charts and image are from TradingView.com, CryptoQuant.
“This article is not financial advice.”
“Always do your own research before making any type of investment.”
“ItsDailyCrypto is not responsible for any activities you perform outside ItsDailyCrypto.”
Source: www.newsbtc.com
