Bitcoin Shows Bearish Signals as the Market Overheats

Bitcoin has approached $100K without any major correction. This suggests that the market may be overheated and Bitcoin may fall in the short term.

Bitcoin Shows Bearish Signals As The Market Overheats

Bitcoin fell to $95,800 in the past 24 hours before recovering to its current price. As Bitcoin nears $100,000, questions are being raised about the sustainability of the rally. While investors are excited, some signs suggest caution.

Technical Analysis

On the daily chart, Bitcoin is showing a strong upward trajectory after breaking out of a sideways phase around $65,000 just a few weeks ago. The Relative Strength Index (RSI) is currently at 78.6, signaling that Bitcoin is in overbought territory. Historically, RSI readings above 70 are often a sign of short-term corrections as investors start to take profits.

Bitcoin Analytics
Bitcoin Analytics

In addition, the Bollinger Band indicator shows that the price is approaching its upper limit, suggesting increased volatility. The 20-day moving average is currently lagging the spot price significantly, raising the possibility that the price could correct back to the mean, especially if profit-taking pressure is strong.

On-chain analysis

The Spend Output Profit Ratio (SOPR) chart – a measure of how profitable Bitcoin transfers on-chain are – has been steadily rising alongside the price. Over the past week, the SOPR reached 1.08, indicating a significant improvement in realized profits.

Traditionally, high SOPR levels like the current one coincide with local tops, as investors tend to increase profit-taking during bull markets. If the SOPR were to drop sharply, it would signal increased selling pressure, potentially triggering a significant correction. The spike in SOPR has now stalled, with the index falling to around 1.04.

Btc Sopr
Btc Sopr

Another worrying signal comes from the Bitcoin Funding Rate chart, which shows a sharp increase across many major exchanges. Funding rates turn positive when long positions dominate the market, but high levels reflect over-leverage. Currently, the funding rate is approaching levels seen at the peak of the 2021 bull market, suggesting that speculative enthusiasm may be reaching extreme levels.

If a correction occurs, over-leveraged positions are at risk of being liquidated en masse, which could exacerbate selling pressure and push prices further down.

Read more: XRP Poised to Surge to $1.96 Amid Positive Signals

While Bitcoin’s rally is historic, the convergence of factors such as an overbought RSI, high SOPR values, and a spike in funding rates are all warning signs that the market is overheating.

A healthy correction not only helps reduce speculative pressure but also creates an opportunity for the market to reset, paving the way for long-term sustainable growth instead of continuing to chase speculative fever.

Love

0.0/5

Love

Latest

How To Join The Beamable Airdrop

Airdrops | Editor Choice

How to Join the Beamable Airdrop

Beamable is an online game development platform that empowers developers to build, manage, and scale games without the headache of setting up complex server infrastructure.

Azcnews Breaking Crypto Market Recovers, But Weakness Remains As Trading Volume Drops

News | Bitcoin | Editor Choice

Crypto Market Recovers, but Weakness Remains as Trading Volume Drops

The crypto market is rebounding, but declining trading volume and fading momentum raise concerns about the sustainability of the recovery.

Superx Spring Contests 2025

Airdrops | Editor Choice

SuperX Spring Contests 2025: Compete for Top Volume and Win $1 Million with BingX!

Are you looking for an opportunity to earn money through crypto trading? BingX's SuperX Spring Contests is the perfect playground for you! With a total prize pool of up to $1,000,000, this event is exciting the global trading community.

How To Participate In The Newton Airdrop

Editor Choice | Airdrops | News

How to Participate in the Newton Airdrop

Join the Newton airdrop hunt! The project has successfully raised $83 million from top investment funds and is allowing users to earn credits for a chance to receive future airdrops.

How To Participate In The Mawari Airdrop

Airdrops | Editor Choice

How to Participate in the Mawari Airdrop

Join the Mawari airdrop hunt! The DePIN project has successfully raised $17.3 million and is currently running a point-earning program on Galxe.