Is Bitcoin Now Overheating? Key Metrics Reveal Crucial Insights For Investors

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As a seasoned crypto investor who has witnessed Bitcoin’s rollercoaster ride since its inception, I find aytekin’s analysis to be both insightful and reassuring. While I’ve seen my fair share of market euphoria and panic, it’s always beneficial to have experts like aytekin provide guidance on distinguishing between useful and misleading metrics.

In the ongoing effort for Bitcoin to reach its record-breaking six-figure peak, an expert crypto analyst named aytekin from CryptoQuant has provided a detailed breakdown of various tools to gauge Bitcoin’s market heat, emphasizing the importance of separating valuable from possibly deceptive indicators.

As a crypto investor, I often find myself pondering over Bitcoin’s potential to scale new heights and predict when it might encounter a market peak. To steer through these uncertainties, Aytekin suggests two charts that I’ve started to focus less on for understanding market sentiment: “open interest” and the “supply in profit” metric.

Challenges With BTC Key Metrics

It was explained by the analyst that making a clear cause-and-effect connection between price and the number of outstanding contracts (open interest) can be difficult because it appears that changes in prices usually lead to shifts in open interest, not the other way around.

Additionally, it’s predicted that as futures markets expand and Bitcoin becomes more widely used, there will likely be increased levels of outstanding contracts (open interest) in the future.

A metric that Aytekin considers could be deceiving is the “total supply in profit,” which gauges the overall network’s profitability. This statistic tends to align with Bitcoin’s market value, frequently causing significant surges in profitability, often exceeding 95%, during all-time high (ATH) periods.

Aytekin proposes that maintaining sustained high profits could pose difficulties if they routinely prompt substantial selling off. Alternatively, he advises examining the duration of these elevated profitability periods, pointing out that in the past, such circumstances have persisted for as long as a year within broader market trends.

Credible Metric Suggests Overheating Bitcoin?

Instead, the analyst highlighted two crucial indicators he deems significant for monitoring Bitcoin’s market mood: the funding rate and the Spent Output Profit Ratio (SOPR). The funding rate, which measures the expense incurred between long and short positions within futures markets, is a means to pinpoint excessive optimism in the market.

According to Aytekin, examining this particular metric gives a clearer understanding of market circumstances compared to open interest. Right now, he points out that the current funding rates aren’t indicating any unusually intense market activity.

The analyst explains how the SOPR metric helps identify trends in profitability, especially when it’s averaged over a 30-day period.

Aytekin points out that profitability isn’t necessarily risky on its own, but becomes so when it aligns with market supply shifts. As per the analysis by CryptoQuant, the current SOPR levels suggest a market that is profitable, yet doesn’t show signs of overexertion or overheating.

Currently, Bitcoin is being traded at approximately $81,838, showing an increase of 2.4% over the past 24 hours. However, this price represents a slight decrease of 0.6% compared to its all-time high of $82,379 achieved earlier today.

In your writing, you’ll find that the market value of this asset exceeds 1.6 billion dollars, and its 24-hour trading volume amounts to approximately 90.6 billion dollars.

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2024-11-12 06:04