Bitcoin has seen record inflows with accumulating addresses indicating strong demand, but on-chain analysts warn that the rapid price rise has led to an overheated bull market, with miners and traders at risk of selling.
According to on-chain analyst Julio Moreno, Bitcoin has seen massive inflows into accumulated addresses, indicating record high demand. However, some indicators also suggest that the Bitcoin market is in an overheated phase.
An accumulation address is a wallet that only receives BTC and never spends it. This indicates that the investor is buying and holding Bitcoin. According to Moreno, inflows into these accumulation addresses are at an all-time high, showing very strong demand for Bitcoin.
But Moreno also warned that prices are rising so quickly that some indicators are starting to signal an overheated bull market. Bitcoin bull market cycle indicators indicate that the market is in an overheated bull phase, with the price reaching $60,000.
Additionally, Bitcoin miners are being overpaid at current price levels based on the Bitcoin Mining Hash Ribbon Indicator. Miners receive block rewards and transaction fees in return for securing the network, but as the price of Bitcoin rises, the rewards also become very high. If the mining hash ribbon is in “overheated” territory, it means miners’ income is unsustainably high, which could lead to selling pressure.
Moreover, the trader’s unrealized profit margin is very high at 45%, indicating the risk of the trader selling to take profits if the price stops rising.
On-chain data shows strong cumulative demand, but short-term indicators reflecting market conditions can be overextended. Bitcoin’s rapid price rise in 2021 has led to a frothy situation, but the long-term bullish case remains as investors continue to accumulate and hold Bitcoin.
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