Main points
- CryptoQuant identifies five key metrics Signaling when Bitcoin may be approaching an unsustainable price peak.
- The MVRV ratio and the Fear and Greed Index have raised warning signs, Hints at potential short-term risks.
- Other metrics, including new money inflows and days of burned coins, Bullish trend still supported but needs to be monitored closely.
Five Key Warning Signs from CryptoQuant – Is Bitcoin Ready to Crash?
On-chain data provider CryptoQuant has highlighted five key indicators that can help investors assess whether Bitcoin is approaching a local price peak.
Notably, one of the indicators has already sent a cautious signal. in a post Share on XCryptoQuant outlines key tools that investors should monitor. This will help determine whether the price of Bitcoin may reach unsustainable levels.
MVRV ratio
The first metric, the MVRV ratio, assesses the market value of Bitcoin. It represents the ratio of the total value of all mined coins to the realized value. This becomes the sum of the latest selling prices of all Bitcoins in circulation.
According to data from CryptoQuant, a ratio above 3.7 indicates that Bitcoin may have reached a short-term valuation peak.
this MVRV ratio surges The high of 7 in February 2021 coincided with Bitcoin’s historic rally to around $60,000. However, according to data from CoinGlass, the ratio is 2.67 — a warning sign worth monitoring.
Overheated Fear and Greed Index
Another key indicator to monitor is the Crypto Fear and Greed Index. It assesses the overall sentiment of the cryptocurrency market. When the index exceeds 80 (out of 100) and other warning signs appear, it may indicate that Bitcoin is approaching a price peak.
Since November 12, the index has continued stay above 80. Both November 17 and 19 reached an impressive 90, which is the highest level since February 2021.
New money flows into Bitcoin
The third indicator assesses the level of new capital entering the market. When there is a lack of new funds, cryptocurrency prices tend to lose momentum and eventually fall.
According to CryptoQuant, the Realized Cap Growth chart is an effective tool for tracking these inflows.
Current data shows that new capital inflows remain relatively strong, indicating that Bitcoin is still in a bullish phase.
coin day destruction tool
This tool tracks consistent Bitcoin activity over time to determine whether the coins are being sold. According to CryptoQuant, A break above 15-20 million could signal short-term bearish pressure.
Currently, this indicator 15.1 million people, Indicates sales activity has increased, but has not yet reached critical levels.
interswitch traffic pulse
the last key index is the Inter-Exchange Flow Pulse (IFP), which tracks Bitcoin transfers on derivatives exchanges. According to CryptoQuant, IFP continues to show a positive trend, with traders moving Bitcoin to these exchanges as collateral.
Currently, IFP is about 730,000, showing an upward trend. In the previous bull market, IFP peaked at 1 million, while in the bear market in late 2023, it fell to a low of 200,000.
Analysts weigh in on Bitcoin’s trajectory
Despite these warning signs, some analysts remain bullish. Matthew Sigel, director of digital asset research at VanEck, said in a recent interview with CNBC predict Bitcoin may reach $180,000 this cycle. If Bitcoin hits $180,000, it will be a 1000% return from bottom to top this cycle.
Siegel believes that Bitcoin’s rebound has just begun. Given the absence of technical resistance, Bitcoin could reach new highs before the end of 2024.
Sigel said support from governments, pro-cryptocurrency governments and massive inflows of institutional money are driving the rally. He also mentioned that Google searches for Bitcoin have reached their highest level in four years. This indicates increased interest in Bitcoin.
As of November 19, Bitcoin hit a new high of $94,100, reflecting its upward trajectory. Given the heightened optimism, Bitcoin is likely to see a sustained upward trend.
View all posts by Rida Fatima
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