Bitcoin's new all-time high has traders asking: Is BTC price overheating at $111K?

1 day ago

Key takeaways:

Bitcoin deed a caller all-time precocious of $111,970 connected May 22, but retraced to $110,700, with analysts noting mixed signals connected marketplace overheating.
Funding rates and different metrics suggest a “healthy upward phase.”

Bitcoin’s (BTC) terms recorded a caller all-time precocious of $111,970 connected May 22. However, BTC terms retraced soon aft to commercialized astatine $110,700 astatine the clip of writing.

Despite the correction, determination are mixed signals astir whether the terms rally is overheated oregon whether this is simply a steadfast pullback.

Bitcoin “still not overheated” — analyst

Bitcoin is not showing immoderate signs of being overheated contempt reaching caller all-time highs this week, with respective analysts pointing to fundamentals suggesting Bitcoin could emergence further.

“Overheating indicators specified arsenic the backing complaint and short-term superior inflow stay debased compared to erstwhile peaks, and profit-taking by short-term investors is limited,” said CryptoQuant expert Crypto Dan successful a May 22 Quicktake note.

Crypto Dan pointed retired that Bitcoin’s backing rate, an indicator of marketplace overheating, shows an summation successful agelong bets. However, these bets “remain overmuch smaller compared to erstwhile peaks,” suggesting “futures marketplace overheating is negligible.”

A spike successful Bitcoin funding rates tin sometimes origin interest among marketplace participants astir accrued Bitcoin volatility and liquidation risks.

Still, the backing rates are moderately positive, signaling that traders are optimistic astir Bitcoin’s terms and buyers are consenting to wage sellers a interest to clasp their positions.

Meanwhile, the short-term holder (STH) Spent Output Profit Ratio (SOPR) metric reveals that contempt STHs returning to profit, fewer person taken profits during the recent rise.

This indicator is presently valued astatine 1.02%, suggesting that STHs are realizing immoderate profits astatine overmuch little rates.

“In March 2024, determination was important profit-taking and a prolonged correction, but currently, profit-taking is overmuch little than successful November 2024,” the expert explained, adding that contempt the terms astatine all-time highs, whales’ profit-taking enactment remains comparatively subdued.

CryptoQuant’s Crypto Dan expected Bitcoin to proceed rising higher, noting:

“Overall, the Bitcoin marketplace is inactive successful a steadfast upward phase.”

Meanwhile, Bitcoin’s MVRV Z-score worth — a metric that compares BTC’s marketplace worth to its realized worth and adjusts for volatility — has seen a notable surge implicit the past month.

Historically, each erstwhile Bitcoin bull runs started with a notable surge successful MVRV Z-score and ended with the metric entering the reddish portion (see illustration below) to awesome that Bitcoin is importantly overvalued.

At 2.8, the MVRV Z-score is inactive importantly beneath the reddish zone, suggesting that the market apical is not yet in.

Bitcoin’s RSI entering “exhaustion”

Bitcoin’s comparative spot index, oregon RSI, displays overbought conditions successful 2 retired of 5 timeframes. Bitcoin’s RSI is present astatine 70 successful the 12-hour timeframe and 75 connected the regular chart. Other intervals amusement near-oversold RSI values connected the play and four-hour timeframes.

Data from TradingView shows BTC’s RSI astatine 75, 71, 68 and 66 connected daily, 12-hour, play and four-hour timeframes, respectively. Meanwhile, the Crypto Fear & Greed Index is 78, indicating “extreme greed” conditions.

When investors get excessively “greedy,” the marketplace is often overdue for a correction. The past clip this scale was astatine akin levels was astatine the tallness of the Trump-driven pump successful December 2024, conscionable earlier BTC dropped down from its then-all-time precocious of astir $108,000 and tumbled toward $74,000 successful March.

Even though these metrics are cautioning marketplace participants to negociate risks, it is important to enactment that RSI conditions bash not warrant a inclination reversal. Crypto prices are highly volatile, and BTC could proceed to rally, fueled by increasing spot ETF demand and easing commercialized warfare tensions.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.

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