CryptoQuant Analysis Shows Market May Be Overheating, Heading For Further Correction

  • Bitcoin reached an all-time high of US$73,750, stirring talks of a correction after a dip to US$60,963.
  • Overheating indicators like the Bull-Bear Market Cycle and high trader profits signal a potential shift to bearish conditions.
  • Despite immediate correction predictions, low new investment flows and valuation levels hint the bull cycle will persist.

Bitcoin’s recent climb to an all-time peak of US$73,750 (AU$112,221) has sparked speculation about an impending correction phase. Although we have seen BTC fall as low as US$60,963 (AU$92,756) analysts at CryptoQuant believe we could soon see further corrections.

At the time of writing BTC trades at US$65,779 (AU$100,084) down 7.8% week-on-week, source: CoinMarketCap

Related: Top Analyst Ran Neuner Unveils Next Big Narratives in Current Crypto Rally

The analysts are closely monitoring a set of indicators that hint at an overheating market, raising concerns among investors about the sustainability of the current price levels. Key among these indicators is the Bull-Bear Market Cycle Indicator, a reliable metric for gauging market sentiment, which currently signals a potential shift from bullish to bearish conditions.

CryptoQuant Bitcoin Bull-Market Cycle Indicator, source: CryptoQuant

Several Metrics Reached Overheated Levels

In addition to the Market Cycle Indicator, there’s a noticeable uptick in profit margins among traders, suggesting that many are capitalising on the high prices to secure gains.


Traders have begun selling to realise high-profit margins, with short-term holders selling at the highest margin since May 2019.


This profit-taking behaviour is often a precursor to a market downturn, as it can lead to increased supply and pressure on prices. Moreover, there’s a discernible increase in selling activities by large investors or “whales,” which can significantly impact market dynamics due to the sheer volume of their transactions.

Large Bitcoin holders have started selling more aggressively, and miners have also been offloading their holdings as prices have soared past $70K.


Another factor contributing to the anticipation of a market correction is a reported dip in demand for Spot Bitcoin ETFs from the United States. As one of the largest markets for Bitcoin, fluctuations in US demand can have a pronounced effect on global prices. This decrease in demand might be indicative of a broader sentiment shift or a reaction to regulatory or economic developments within the country.

Despite Short-Term Outlook Bull Cycle Far From Over

Given these indicators, several price models are now suggesting that Bitcoin could undergo a testing phase, potentially dipping into the US$58k to US$60k (AU$88k to AU$91k) range. Such a correction would not be unusual following the rapid price increases observed, but it will be crucial for investors to watch for further signals and adjust their strategies accordingly.

Related: Bitcoin Rallies on Favourable FOMC Meeting Outcome

However, the analysts at CryptoQuant also stated that the modest influx of new investments and valuation indicators still shy of historical market peak levels imply that the bull market is likely to continue after a correction and the cycle is not over by a long shot.

Aaron Feuerstein

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

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