INDICATORS HINT AT POTENTIAL BTC PRICE CORRECTION 

Opening positions in the perpetual futures market has grown costly, with traders’ unrealized profits approaching exceptionally high levels, hinting at potential market adjustments.

Market intelligence from CryptoQuant suggests that Bitcoin (BTC) might be on the brink of a correction after its surge to a $64,000 valuation, as certain on-chain metrics indicate the market could be overheating.

CryptoQuant’s latest analysis points out that the increase in traders’ unrealized profit margins, coupled with the rising costs of initiating new long positions in the perpetual futures market, could signal a forthcoming pause or downturn in BTC’s price trajectory.

The Ongoing BTC Surge

The market has witnessed a strong bullish momentum this week, with Bitcoin’s value climbing over 25%, reaching heights last observed in November 2021. From starting below $52,000, BTC has soared past the $60,000 mark, trading at $62,600 after retracting from $64,000.

The surge is attributed to significant demand from U.S. investors, as seen in the Coinbase premium index hitting 0.13%, a peak since mid-February.

Major buyers have been accumulating BTC, with their holdings now at 3.975 million BTC, a figure last noted in July 2022. This accumulation marks a substantial increase from the December 2022 low of 3.694 million BTC, particularly among entities holding between 1,000 and 10,000 BTC.

Moreover, there’s been a noticeable 10% increase in fresh capital entering the Bitcoin market, as indicated by the short-term holder realized capitalization, now accounting for 35% of the total investment in the network, up from 25% in October 2023.

Anticipation of a Market Adjustment

As BTC’s demand escalates, the likelihood of an imminent correction grows. The asset’s breach beyond the $56,000 threshold—a prior short-term objective based on network activity valuation—hits the red Metcalfe Price Valuation Band. This level has historically acted as a resistance point in April and November of 2021, as well as April 2022, suggesting a potential correction could be near.

Furthermore, the costliness of initiating new long positions in the perpetual futures market and the traders’ unrealized profit margin reaching 32%, nearing the critical 40% threshold typically associated with corrections, underscores the possibility of price adjustments.

Despite these indicators, the Miner Profit/Loss Sustainability metric indicates that the current BTC price may not be overly inflated, as miners continue to receive payments at a rate slightly improved from early January, when BTC was valued at $38,000, suggesting some stability amidst the surge.

Read more from the blog

News

3 May 2023

StoneBlock CEO: Nervous investors will be eliminated from the market

News

22 Apr 2024

ANIMOCA BRANDS HOLDS $558M IN CRYPTO ON BALANCE SHEET 

News

22 Apr 2024

CRYPTOJACKER ACCUSED OF $3.5M FRAUD AGAINST TWO CLOUD PROVIDERS