CryptoQuants Bitcoin Bull-Bear Indicator Flags Price As Overheated

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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Bitcoin Officially In Overheated MVRV Zone, Rally End Near?

On-chain data shows Bitcoin has recently surpassed a level of the Market Value to Realized Value (MVRV) Ratio that has historically signaled overheated conditions. Bitcoin Has Surpassed Highest MVRV Deviation Pricing Band In its latest weekly report, the on-chain analytics firm Glassnode has discussed about how Bitcoin is looking right now from the perspective of a pricing model based on the MVRV Ratio. The MVRV Ratio is a popular BTC indicator that keeps track of the ratio between the market cap of the asset and its realized cap. The latter here is an on-chain capitalization model that, in short, tells us about the amount of capital that the investors as a whole have used to purchase their tokens. Related Reading: Shiba Inu Could See A 53% Surge If This Resistance Breaks, Analyst Explains Since the MVRV Ratio compares this initial investment against the value that the investors are currently holding (that is, the market cap), it essentially provides information about the profitability of the addresses on the BTC network. Now, the pricing model that Glassnode has created doesn’t directly make use of the MVRV Ratio itself, but rather some standard deviations (SDs) from its mean. Below is the chart for this model shared by the analytics firm in the report. In this model, pricing levels correspond to BTC prices at which the MVRV Ratio would attain a value equal to a certain SD above or below its mean. At the +0.5 SD level, for instance, the MVRV Ratio is 0.5 SD greater than its mean value. From the graph, it’s apparent that the Bitcoin price has broken past the highest of the pricing bands part of this model with its latest run. The level in question is the +1.0 SD, equivalent to $90,200 at the moment. Historically, BTC has tended to form tops when its price has exceeded this pricing band. The reason behind this is the fact that at such high levels of the MVRV Ratio, the investors carry a significant amount of profits, so a mass selloff with the motive of profit-taking can become a real possibility. Related Reading: XRP Binance Inflows Spike: What It Means For Price The last time that the cryptocurrency broke past this barrier was in the first quarter of this year. As is visible in the chart, it didn’t take the price long to top out back then. In full-blown bull markets in the past, however, Bitcoin has generally sustained inside this overheated territory for notable periods of time before finding a peak. An example of this trend is also highlighted in the chart; the first half 2021 bull run saw the coin stay in the zone for a few months thanks to high capital inflows. As such, it’s not necessary that BTC would immediately reach a cyclical top now that it has become overheated on this model. BTC Price Bitcoin had risen beyond the $98,000 level earlier in the past day, but it seems the coin has suffered a minor setback as it’s now back at $97,500. Featured image from Dall-E, Glassnode.com, chart from TradingView.com

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Bitcoin NVT Golden Cross Says BTC Is Overpriced, Decline Soon?

On-chain data shows the Bitcoin NVT Golden Cross has neared the overvalued zone recently, a sign that a drawdown could be coming. Related Reading: XRP FUD Spikes, Will This Trigger A Price Reversal? Bitcoin NVT Golden Cross Is Near “Overpriced” Territory An analyst in a CryptoQuant post pointed out that the BTC NVT Golden Cross [...]

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