Bitcoin UTXO’s profit and loss ratio is below key levels – How long does BTC overheat?

Bitcoin is about to enter the unknown after marking $108,000 as $108,000 earlier today. Flagship cryptocurrencies have soared more than 40% since early April, due to market optimism and rising institutional demand. However, the price showed hesitation (ATH) and now merged about $106,000. This key level acts as both resistance and psychological barrier, creating mixed emotions in the market.

While many analysts remain bullish, calling for a breakout that could bring Bitcoin into price discovery, others warn of premature euphoria, suggesting that if momentum stalls are likely to recover sharply. Top analyst Axel Adler shared insights that each strong price acceleration shifts a large number of coins from loss to profit, an event that typically pushes the 30-day simple moving average (SMA) of UTXO profit-to-loss ratio to 200. This level has historically marked overheating conditions and has been significantly corrected.

As of now, the metric position is 99, indicating that the market has not entered the overheating stage. This shows that Bitcoin still has room to run before the mood becomes too much, leaving the door open to further rise or pay attention.

Motivation or correction? Key metrics indicate that Bitcoin still has room to run

This is a crucial week for Bitcoin and the crypto market as a whole, with price action that determines the direction for the coming weeks. After hitting $107,000 on Sunday, Bitcoin was quickly rejected, retroactively relocating to around $106,000. That fake highlights the market’s vulnerability near the all-time high (ATH) area. A clean breakout of over $109,000 will confirm that it begins with the continuation of a strong bullish trend in 2023. But if Bitcoin loses its current levels and is below critical demand, it could trigger deeper corrections, shaking bullish beliefs.

Adler provides key insights into market sentiment by analyzing UTXO’s profit to damage ratios. Historically, each powerful price acceleration shifts the coin from loss to profit, which leads to the 30-day simple moving average (SMA) of the indicator to a spike of over 200, the signal overheated and often marks the beginning of the distribution phase. Currently, the SMA is at 99, well below the warning threshold, indicating that there are no signs of too much.

Adler pointed out that while Bitcoin still has room to grow, the “simple fuel” behind the earnings is disappearing recently. A stronger push or greater volatile price action will be needed to drive higher metrics. Interestingly, this is consistent with the larger pattern, the third phase of this cycle. If the analogy holds, this coiled spring may soon release a strong enough energy to keep Bitcoin away from its ATH, but the risk of rejection remains very real.

Technical Analysis: Key Weekly Price Action

Bitcoin traded at $106,394 after it hit a local high of $108,035 earlier today. The chart shows that BTC holds above the $103,600 breakout level and now acts as a strong support zone. Price action confirms the bullish structure, with high and higher lows forming over the past few weeks. The 200-day SMA is $93,186 and the 200-day EMA is $88,855, which is much lower than the current price, strengthening the strength of the ongoing uptrend.

However, the price has now consolidated below all-time highs, with obvious resistance approaching $109,000. The area marks a key test for the Bulls. Breaking it above will confirm the shift into price discovery and may trigger a wave of momentum to buy. On the other hand, not pushing higher pushes could lead to a retest of the psychological level of $103,600 or even $100,000.

Despite the recent rally, the number remains moderate, suggesting that a strong breakthrough will require higher engagement. This structure is currently similar to a highly consolidation zone, usually a precursor for volatile moving. The Bulls are still in control at the moment, but any drop below $103,600 will weaken short-term momentum and may trigger wider avoidance. Everyone’s eyes were staring at the behavior of BTC around the ATH area.

Featured images from DALL-E, charts from TradingView

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