Bitcoin has experienced a surge in inflows into accumulation addresses, indicating a high demand for the cryptocurrency. However, on-chain analysts are warning that the rapid increase in price has led to an overheated bull market, with potential risks of selling by miners and traders.
Julio Moreno, an on-chain analyst, has noted the significant inflows into accumulation addresses, suggesting a strong demand for Bitcoin. Despite this positive trend, there are indications that the market may be overheating.
Accumulation addresses are wallets that only receive Bitcoin and do not spend it, indicating a strategy of buying and holding. Moreno highlights that inflows into these addresses have reached record levels, demonstrating a robust demand for Bitcoin.
However, Moreno also cautions that the rapid price surge has raised concerns of an overheated bull market. The Bitcoin bull-bear market cycle indicator has signaled that the market is in an overheated phase, especially as prices have surpassed $60,000.
Furthermore, the Bitcoin mining hash ribbon indicator suggests that miners are being overpaid at current price levels. While miners receive rewards for securing the network, excessively high Bitcoin prices could lead to selling pressure. Similarly, traders’ unrealized profit margins are at elevated levels, indicating potential selling pressure if prices stabilize.
Despite strong accumulating demand shown in on-chain data, short-term indicators suggest that market conditions may be stretched. The rapid price surge in 2021 has created frothy conditions, but the long-term bullish outlook remains positive as investors continue to accumulate and hold Bitcoin.
Image source: Shutterstock
