Recently, the value of Bitcoin soared beyond the $70,000 threshold, a milestone that few had forecasted before the cryptocurrency‘s halving event. This development underscores the unpredictability of expert projections in anticipating Bitcoin’s trajectory. Although the price has reached an unprecedented high, financial indicators and analyses suggest a potential downturn may be imminent, according to market watchers and independent experts.
Market Signals Suggest Caution
The prominent digital currency has not only achieved a new peak at $72,800 but has also managed to maintain its ground, consistently trading above $72,000. As market participants closely watch the impending response from Asian investors, the TD sequential indicator hints at a probable price decline shortly. Independent analyst Ali highlighted that the indicator has flashed a sell signal with Bitcoin trading above $71,700 on a 12-hour chart. This pattern has historically been followed by market corrections, with past sell signals leading to price dips ranging from 1.6% to 3.5%.
Assessing an Overheated Market
Meanwhile, CryptoQuant analysts have raised alerts about the market’s overheated state ever since Bitcoin shattered its previous record highs. While investor sentiment reached fervent levels driven by FOMO from traditional finance sectors, concerns are now shifting toward potential excessive sell-offs, particularly through ETF channels. Although the immediate impact of such sell-offs may not be drastic, the foundation for subsequent bear markets could be set, leading to significant downturns.
Analysts have observed another key metric indicating that miners are currently receiving excessive compensation, with profits hitting their highest point since December 2023. Additional data shows that unrealized profit margins for investors have climbed to 57%, a level that in the past has been associated with corrective phases in the market. Moreover, short-term investors have begun liquidating their holdings at profit levels not seen since February 2021, which could intensify the selling pressure.
Further market indicators, such as the overbought status of the RSI and a fear and greed index score of 82, suggest that the market is experiencing extreme greed, typically a precursor to a price correction. Should an extensive correction occur, it could profoundly affect altcoin valuations. Despite the potential for a pullback, it’s worth noting that Bitcoin has recently witnessed substantial buying interest at the $38,500 level, and major altcoins have not deviated significantly from their values at that time.