Bitcoin is down 9% against ATH as the market shows signs of ‘overheating’.
Bitcoin (BTC) was trading at $68,319 on March 15, down 4.5% in the past 24 hours, as the crypto market is showing “overheated” conditions, according to a report by Chain Analytics on IntoTheBlock.
According to data from Cointelegraph Markets Pro and TradingView, the price of BTC fell 9% from an all-time high of $73,835 on March 14 to a new weekly low of $65,565 on March 15.
The fall in Bitcoin prices also triggered a sell-off in the market, according to data from CoinMarketCap, with the global crypto market falling 4.1% on the day to settle at $2.59 trillion.
Ether (ETH), the second largest cryptocurrency by market capitalization, also fell 5% to $3,708 in the last 24 hours. Other high-cap tokens were also glowing red, with BNB (BNB), XRP (XRP), Cardano's ADA (ADA), and Dogecoin (DOGE) losing 2.3%, 7.3%, 5.8%, and 8% of their value, respectively. In the same period.
Solana's SOL (SOL) was the only token among the top 10 cryptocurrency gains, rising 8% in the last 24 hours.
Earlier, Cointelegraph warned that the BTC price could be corrected in “excessive” conditions by X user TOBTC.
Data from market intelligence firm IntoTheBlock corroborates this data, showing signs of a correction with increasing leverage in the crypto market.
From 2021, the amount of funding has reached a high level
In this week's Chain Insights newsletter, Into ZeBlock reports that “Bitcoin perpetual swap buyers will pay short-term cash at their highest level since October 2021.”
In the chart below, IntoTheBlock analysts note that BTC's “funding on Binance and Bybit reached 0.06% and 0.09% levels yesterday, respectively, every 8 hours.”
“These payments translate into an annualized value of 93% and 168% for Bitcoin to go long,” the report added.
“An unusually high level of funding is indicative of a very skewed market on the long side.”
Additional data from Coinglass shows that Bitcoin Futures open interest (OI) across all exchanges reached an all-time high of $35.55 billion on March 15.
While the higher OI reflects new buying in the market with increased inflows into the space, analysts at IntoTheBlock suggest that “excessive pricing in the data sends a warning signal to the market.”
Diffie's ecosystem is accumulating too much risk.
The use cases are expanding beyond centralized financial exchanges, with decentralized finance (DeFi) networks increasing lending significantly.
The chart below shows that the total debt on all DeFi protocols will double by 2024. Additional data from IntoTheBlock indicates that as of early January, the total debt had increased to around $2 billion.
“As Bitcoin reaches new all-time highs, crypto investors are starting to look for leverage on their holdings.”
Into Zeblock also reported that the “total amount of debt issued by Ethereum via Aave v3” has risen.
“The amount of Bitcoin (WBTC) sealed so far in 2024 has increased to over 10,000 BTC (~$700M),” the report added.
This means that the value in DeFi has increased as the “need to use” has increased.
As such, the firm warns that the DeFi ecosystem is accumulating too much risk, which could lead to a price correction in the near future.
“The crypto market may undergo a sharp correction as organized positions are reversed or dismissed.”
Related: Bitcoin shorts remain rare amid ‘very normal' sub-$66K BTC price
Bitcoin holders are currently sitting in profit
BTC price breached multiple all-time highs in March largely influenced by the success of Bitcoin ETFs in the United States.
Referring to “overheated” conditions, IntoTheBlock's report points out that “the 90-day average return for the top 20 crypto-assets (excluding stablecoins) […] It's 103%.”
This means that most traders have made a profit from their crypto investments. According to independent analyst and X user Ali, investors are “sitting on 70% of their current holdings.”
In a March 14 post on X, analyst Ali shared the following chart from CryptoQuant, which shows traders' unrealized profit margin reaching 69% as the price rises above $73,000, which is historically associated with corrections when traders take profits.
Ali said:
“This unknown $BTC gain is the highest in the last three years!”
Additional data from IntoTheBlock shows that 86% of all Bitcoin holders are in profit at current prices, increasing the possibility of short selling as profit booking continues.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
