Bitcoin (BTC) price maintains its bullish momentum, but a sentiment indicator suggests the market could be overheating

Bitcoin price maintains its bullish momentum, but a sentiment indicator suggests the market could be overheating. Data highlights Bitcoin traders taking profits and a lopsided market angled toward longs.

Key takeaways:

Bitcoin price maintains its bullish momentum, but a sentiment indicator suggests the market could be getting hot.

Data highlights Bitcoin traders taking profits and a lopsided market angled toward longs.

Analysts highlight a potential short-term correction, especially if gold weakens or considering seasonality trends.

Optimism has returned to the crypto market as many traders believe Bitcoin (BTC) price is now en route to a new all-time high. In just one month, Bitcoin surged 39%, briefly crossing the $105,000 mark. According to Glassnode analysts, “there are signs of renewed market strength, and the market is trading within a profit-dominated regime.”

Still, some investors are already taking profits, pushing Bitcoin’s realized cap to an all-time high of $889 billion. Even more profit-taking is expected at the $106,000 level.

Historically, euphoric market sentiment has often led to periods of consolidation—or even sharp corrections. That risk may be growing, particularly as gold, whose price action Bitcoin has closely mirrored in recent months, is showing signs of fatigue and could be heading for a correction itself.

Most investors are back in profit

The recent Bitcoin rally has returned over 3 million BTC to a profitable state, according to Glassnode. This shift has reignited capital inflows, which exceeded $1 billion per day, suggesting strong demand-side interest and a market capable of absorbing selling pressure. Even most short-term holders who were underwater since the December 2024 peak have seen their portfolios turn green.

This financial and psychological relief is already translating into spending behavior. The net difference between short-term holders’ transfer volume in profit vs. at a loss has swung sharply to +20%—a notable reversal from the -20% seen during the capitulation phase at the end of April.

Credit: Glassnode

Institutional investor confidence is also rebounding. Over the past three weeks, more than $5.7 billion has flowed into Bitcoin ETFs, according to CoinGlass. The total assets under management held within the U.S. spot ETFs have now climbed to over 1.26 million BTC, a new all-time high.

Is crypto trader sentiment too euphoric right now?

With so much momentum, it’s easy to imagine a moonshot. But that same momentum may be cause for caution. BTC’s open interest has climbed to $68 billion, nearly an all-time high, suggesting a heavily positioned market. In such conditions, even a small catalyst could spark an outsized move—up or down.

André Dragosch, head of research at Bitwise Asset Management, warns that Bitcoin might be getting a bit ahead of itself. He recently shared Bitwise’s internal Cryptoasset Sentiment Index, which has reached its highest level since November 2024. The index, which includes 15 sub-indicators spanning sentiment, flows, onchain data, and derivatives (such as the perpetual funding rate and put-call volume ratio), now shows an overheated market.

In his own comments to Dragosch, who is a frequent contributor to Bloomberg, adds that he remains “structurally constructive” on cryptocurrencies until the end of 2025. He names the ongoing accumulation of BTC by corporations and ETPs, which continues to deplete Bitcoin on-exchange balances despite the recent price rally.

Potential crypto market headwinds

Several risks could challenge Bitcoin in the short term.

For Bitwise chief investment officer Matt Hougan, renewed regulatory uncertainty is a top concern, especially after the Senate stalled stablecoin legislation last week.

Broader shifts in market behavior may also be at play. Since March 2025, Bitcoin has shown a stronger correlation with gold than with equities. That shift followed dramatic changes in U.S. policy, which appeared to capital into politically neutral assets: both Bitcoin and gold rose 22% (the latter since corrected to a 13% gain). At the same time, the S&P 500 and Nasdaq-100 merely clawed back earlier losses.

This divergence continues on shorter time frames. Since May 12, major U.S. indexes gained 3% to 4% on positive developments in U.S.-China trade relations, but Bitcoin barely budged. Meanwhile, gold has started printing lower highs—an early signal of a downtrend, as noted by analyst Michael Van de Poppe. If gold enters a corrective phase, Bitcoin might follow suit.

Finally, seasonality may play a role. The adage “Sell in May and go away” has some historical backing. As analyst Daan Crypto Trades notes, May has typically been a green month for Bitcoin (averaging over 8%), while June and September are often the worst-performing months.

“People like to say that technical analysis doesn't work in bear markets and fundamental