CryptoQuant Highlights Red Flags in Bitcoin’s Price Surge

Onchain data service CryptoQuant states that there are five critical warning indications that Bitcoin is about to reach its price high

As Bitcoin continues to rally, reaching a new high of almost $94,100 on Monday, onchain data service CryptoQuant is highlighting five crucial warning indications that could signal an impending price peak.

One of these signs, which is already evident, is a MVRV ratio of over 2.67, indicating that Bitcoin's valuation may be approaching unsustainable levels.

According to CryptoQuant, onchain data points to crucial warning signs for Bitcoin, with one already flashing red. In a post on Monday, the onchain data service highlighted its top five warning indications for approaching an unsustainable level of price appreciation in BTC.

The first indicator is the MVRV ratio, which compares the market value of Bitcoin (the total of all mined coins) with its realized value (the total of all Bitcoins sold recently) to determine its health.

This metric is used to assess whether an asset is over or undervalued, with higher ratios indicating that an asset's valuation may have peaked for the time being.

Based on the data provided by CoinGlass, the MVRV ratio currently stands at 2.67, indicating that Bitcoin's market valuation is still within a healthy range.

However, it is important to note that this ratio reached a maximum of 7 during Bitcoin's historic rally to a peak of almost $60,000 in February 2021.

Another key indicator is the Crypto Fear & Greed Index, which is used to gauge market sentiment on a scale of 0 to 100, with higher scores indicating increasing optimism and euphoria.

According to CryptoQuant (via Cointelegraph), in conjunction with other indicators, Bitcoin might be approaching a local top when the index reaches 80 out of a total score of 100.

Since November 12, index readings have consistently been in this range, peaking at 90 on November 17 and 19 (the highest since February 2021).

Another crucial indicator is the amount of fresh capital entering the market, which can be used to identify market peaks. According to CryptoQuant, when there is little "new money flow," cryptocurrency prices tend to plateau and subsequently retreat.

This is because the entry of new capital into the market is a key driver of sustained price increases, and its absence or depletion can often signal an impending market downturn.

Currently, Bitcoin is in what CryptoQuant calls a "bull phase" because the realized cap growth chart—the perfect instrument for monitoring market capitalization—shows that new money inflows are relatively strong.

Another indicator to watch is whether long-term Bitcoin holders are selling actively. You can use the Coin Days Destroyed tool to see if Bitcoins that have been idle for a while are being sold.

This metric measures the total number of days that a Bitcoin was last moved before being sold, and it can indicate selling pressure from long-term holders if it spikes suddenly.

According to CryptoQuant, a short-term adverse signal for the price of Bitcoin could be indicated if the indicator surges beyond 15-20 million. The current score displayed by the indicator is 15.1 million.

The Inter-Exchange Flow Pulse (IFP) tracks the flow of Bitcoin to and from derivatives exchanges, making it the last indicator. This metric is used to identify بازار crypto peaks and downturns.

According to CryptoQuant, Bitcoin is still being moved to derivatives exchanges to be utilized as collateral, and the IFP continues to display a positive structure.

At present, Bitcoin's IFP is hovering at 730,000 and is trending upward. During prior bull runs, the IFP hit 1 million, and during the late 2023 bear market, it dropped below 200,000.

After Donald Trump's victory, the price of Bitcoin has risen steadily, reaching a new high of almost $94,100 on Monday. Several analysts, including Matthew Sigel, head of digital assets analysis at VanEck, are aiming for a price of $180,000 BTC early next year.