Bitcoin “still not overheated” — analystBitcoin is not showing any signs of being overheated despite reaching new all-time highs this week, with several analysts pointing to fundamentals suggesting 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 analyst Crypto Dan in a May 22 Quicktake note. Crypto Dan pointed out that Bitcoin’s funding rate, an indicator of market overheating, shows an increase in long bets.
CryptoQuant’s Crypto Dan expected Bitcoin to continue rising higher, noting:“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. Historically, all previous Bitcoin bull runs started with a notable surge in MVRV Z-score and ended with the metric entering the red zone (see chart below) to signal that Bitcoin is significantly overvalued.At 2.8, the MVRV Z-score is still significantly below the red zone, suggesting that the market top is not yet in.
Meanwhile, the short-term holder (STH) Spent Output Profit Ratio (SOPR) metric reveals that despite STHs returning to profit, few have taken profits during the recent rise. This indicator is currently valued at 1.02%, suggesting that STHs are realizing some profits at much lower rates.“In March 2024, there was significant profit-taking and a prolonged correction, but currently, profit-taking is much lower than in November 2024,” the analyst explained, adding that despite the price at all-time highs, whales’ profit-taking activity remains relatively subdued.
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Author / Journalist: Cointelegraph by Nancy Lubale
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