Bitcoin inflows at record highs, on-chain analysts warn of overheating

  • Julio Moreno, CryptoQuant’s head of research, highlights unprecedented bitcoin inflows into accumulation addresses, signalling strong demand, yet warns of an overheated bull market due to rapid price escalation.
  • But the mining hash ribbon indicates that miner compensation may be unsustainable, potentially leading to selling pressure.

Bitcoin has experienced an unprecedented surge in funds in recent days, suggesting a robust demand. However, on-chain analysts caution that the sharp price increase has created an overheated bull market.

Robust bitcoin market

Head of research at CryptoQuant, Julio Moreno, who analyses on-chain markets, asserts that bitcoin has experienced significant inflows into accumulation addresses, signaling an unprecedented demand. Nevertheless, there are a number of signs that suggest the bitcoin market is already overheated.

Wallets that only receive bitcoin and never spend it are known as accumulation addresses, and they show that investors are purchasing and retaining Bitcoin.

Moreno claims that deposits into these accumulation addresses have surpassed all previous records, demonstrating a remarkably robust market for bitcoin.

Also read: Bitcoin hits 47% monthly gain, largest since 2020

CryptoQuant’s Julio Moreno raises concerns

Moreno warned that rapid price increases are leading to an overheated bull market, with the bitcoin indicator signaling an overbought phase above $60,000.

According to the bitcoin mining hash ribbon indicator, miners are receiving excessive compensation. Miners are rewarded with block rewards and transaction fees for securing the network, and their earnings increase with higher bitcoin values. The “overheated” zone on the hash ribbon indicates that miner revenue might not be able to continue, which might put pressure on sales.

The sudden surge in the price of bitcoin in 2021 has created frothy circumstances, but investors are still buying and holding the cryptocurrency, supporting the long-term bullish thesis.

Sylvia-Shen

Sylvia Shen

Sylvia Shen, a news reporter at BTW media dedicated in Fintech and Blockchain. She graduated from University of California, Davis. Send tips to s.shen@btw.media.

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