Bitcoin

Another Bitcoin Price Dump is Highly Possible: According to CryptoQuant


Bitcoin’s price might see another correction despite recovering strongly from the weekend dump to $61,000, as per analysts at CryptoQuant.
In a community “quicktake” shared on Monday, Bitcoin and Ethereum trader GAAH suggested that the current bullish market sentiment may be overheating based on data from the perpetual futures market.
Is Bitcoin Still Overheated?
According to the analyst, average 30-day funding rates for Bitcoin remain high, even after the recent price drop. These rates are currently similar to those seen during Bitcoin’s 2021 all-time high, which now acts as the digital currency’s “strongest resistance ever.”
“The price is following a defined channel with approximately 20% expansion/retraction, providing an ideal setting for significant players to establish large positions,” wrote GAAH.
The last time Bitcoin funding rates were in a similarly bearish position was in late 2022 when Bitcoin’s price was only 25% of its current value. Since then, the asset has gone through several brief corrections of around 20%, but it hasn’t experienced a funding premium like what we see today.

The sharp upward movement of the asset has encouraged many retail investors to start taking profits. The Spent Output Profit Ratio (SOPR) for short-term holders reached levels of “extreme greed” in March and has now moved towards a more neutral level.
“Historically, significant profit-taking by retail investors indicates a potential market top,” added the analyst. “Following the recent price drop over the past two days, there has been a considerable realization of profits by these holders.”
How To Identify The Next Bottom
Lead Glassnode analyst James Check commented on the same metric on Sunday, suggesting that its recent drop below a 1.0 ratio is a positive sign for bulls. He mentioned that short-term holders are currently at a loss compared to long-term holders, and the market needs to get rid of weak positions before moving higher.
“SOPR is a metric that favors contrarians,” he suggested. “Keep an eye out for the retest of 1.0 – it should break above without facing resistance.”
Bitcoin’s crash over the weekend led to $700 million in liquidations within 24 hours. Many suspect that this was triggered by escalating geopolitical tensions between Iran and Israel.
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