Bitcoin hits all-time high without leverage surge — Is $120K next?
- BTC tagged a report excessive of over $111K, however the market was not overheated.
- Possibility merchants had been pricing a 15% of BTC extending to $120K by the tip of Might.
Bitcoin’s [BTC] run-up to a brand new ATH of $111.8K prolonged the crypto asset’s Q2 restoration positive factors to 48%.
However the report rally wasn’t accompanied by huge market leverage, signalling a wholesome state of affairs for bullish continuation.
However do different indicators monitoring an overheated market paint the identical image, and what are the important thing ranges to observe?
Assessing BTC’s uptrend dangers
One of many prime indicators for gauging market leverage, Funding Fee (FR), was but to flash overheated warning alerts at press time.
The FR for BTC ranged from 3% to twenty% previously three days. The indicator is used to tie the worth of the BTC perpetual (futures) contract to the spot market worth.
To realize the correlation, merchants pay a price, the FR, to take care of their place.
In a bullish market, the funding is constructive, and bulls (longs) pay brief place holders periodically, about each 8 hours. For bearish markets, the other applies.
Supply: CoinGlass
That mentioned, extreme market leverage (taking huge loans) to guess on value is at all times flagged by a excessive FR between 50% and 100%.
This type of market froth at all times occurs in bull runs, growing liquidation dangers, a mark of an overheated bull market. The result’s a possible cool-off or pullback.
That’s what occurred after the huge BTC run-up above $100K final November and December. BTC’s FR jumped above 50% and even hit 100% (orange zones).
Quite the opposite, the Might pump to $111K was completely different and marked by a wholesome market with low leverage.
So, from a Funding Charges perspective, the danger of a value reversal because of an overheated market remained low.
One other information that supported additional uptrend was the True MVRV, a valuation metric. At press time, the metric was valued at 1.7 and has beforehand flagged native tops in late and early 2024 when it tapped 2.
Assuming historical past repeats itself, BTC nonetheless has a slight room for development earlier than hitting a neighborhood peak round 2 or a cycle peak (if MVRV hits 3).
Supply: CryptoQuant
However, how a lot larger can BTC climb from $111K?
Possibility merchants estimate solely a 15% likelihood of BTC reaching $120K by Might’s finish. Nonetheless, contracts focusing on $115K and $120K had been essentially the most bought within the final 24 hours.
Even calls aiming for $130K by September noticed robust bids, signaling important bullish sentiment for Q2 and Q3.
Whether or not these bets will materialize stays unsure.
