Is BTC price overheating at $111K?

The key takeaways

• Bitcoin’s price hit an all-time record of $111970, but then retraced back to $110700. The analysts noted that the overheating market was sending mixed signals.

• The funding rates and metrics indicate that a “healthy upward phase.”

Bitcoin’s (BTC) price recorded a new all-time high of $111,970  on May 22. BTC prices retraced quickly after, trading at $10,700 as of the writing.

There are conflicting signals as to whether or not the rally in prices is excessive.

Bitcoin “still not overheated” — analyst

Bitcoin does not show any signs that it is overheating despite reaching new all-time highs This week, several analysts pointed to fundamentals that suggest Bitcoin could rise further.

“Overheating indicators such as the funding rate and short-term capital inflow remain low compared to previous peaks, and profit-taking by short-term investors is limited,” said CryptoQuant expert Crypto Dan on a Quicktake from May 22, 2009. 

Crypto Dan noted that Bitcoin funding rates, an indicator for market overheating and an increase in bets, show an increased number of longs. These bets are not a good idea. “remain much smaller compared to previous peaks,” Please see below for more information. “futures market overheating is negligible.”

Bitcoin is on the rise funding rates Bitcoin’s increased volatility and potential liquidation risk can be a source of concern for market participants.

The funding rates remain positive. This indicates that buyers and sellers are both optimistic about the price of Bitcoin, with some willing to pay a small fee for holding their positions.

While the Spent-Output Profit Ratio of short-term investors (STHs) shows that many have returned to profitability, only a few took profits in the past year. recent rise. 

This indicator currently has a value of 1.02%. It suggests that STHs have some success at rates much lower than this.

“In March 2024, there was significant profit-taking and a prolonged correction, but currently, profit-taking is much lower than in November 2024,” Analysts explained that, even though whales continue to make profits at high levels, their activity is relatively low.

CryptoQuant’s Crypto Dan predicted that Bitcoin would continue to rise higher.

“Overall, the Bitcoin market is still in a healthy upward phase.”

Meanwhile, Bitcoin’s MVRV Z-score value — a metric that compares BTC’s market value to its realized value and adjusts for volatility — has seen a notable surge over the last month. 

The chart shows that historically, every previous Bitcoin bull run began with a significant increase in MVRV Z score and finished with it entering the “red zone” (see below), signaling that Bitcoin was significantly overvalued.

The MVRV Z score is at 2.8 and still below the “red zone”, indicating that it’s not yet in the danger zone. market top is not yet in.

Bitcoin’s RSI is entering “exhaustion”

Bitcoin’s relative value index (or RSIThe RSI of Bitcoin is now 70 on the 12-hour chart and 75 on the daily chart. Bitcoin’s RSI now sits at 70 for the 12-hour and 75 on the chart of the day. Other timeframes have RSI levels that are close to being oversold, such as the weekly and 4-hour intervals. 

TradingView’s data indicates that BTC’s RSI is 75 on the four-hour and daily timeframes and 71 at the 12-hour and weekly. Meanwhile, the Crypto Fear & Greed Index is 78, indicating “extreme greed” conditions.

Investors can get greedy “greedy,” Markets are often due for corrections. This index reached similar levels at its peak during the Trump-driven pump BTC’s price dropped to $0.01 in December of 2024.-all-time high of around $108,000 In March, the figure fell to $74,000.

Related: Bitcoin buyer dominance at $111K suggests ‘another wave’ of gains

RSI does not necessarily guarantee a trend reversal, even though it warns market participants about managing risks. BTC prices could rise further, as cryptos are volatile. increasing spot ETF demand You can also find out more about the following: easing trade war tensions.

The article is not intended to provide investment advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.