Bitcoin Price Temperature Nears Overheated Zone Despite 17.94% Surge

Bitcoin’s Price Temperature (BPT) has risen to 2.67 points, nearing an overheated zone. This increase has sparked concerns among some stakeholders about a potential market correction. However, analysts suggest that despite the rise in BPT, Bitcoin still has room for growth before reaching overheated levels.

Over the past month, Bitcoin has surged by 17.94%, rising from a low of $83,000 to $111,000. CryptoQuant analyst Axel Adler has warned that Bitcoin is approaching an overheated zone, with the BPT rising to 2.67 points. Adler noted that the previous two peaks of this cycle saw BPT reach 2.75 and 3.57 points. On average, BTC temperatures hit the overheated zone if BPT reaches 3.14 points. Currently, there are still 0.47 points before the market enters full overheated territory, indicating that BTC hasn’t reached the prior top levels yet and still has some room for upside movement before reaching overheated levels.

Bitcoin’s Market Value to Realized Value (MVRV) ratio, which measures the market value relative to the realized value, sat at around 2.4 at press time. Over the past month, it has hovered around 2.13 and 2.41. These levels are typically associated with a healthy market. Historically, Bitcoin has reached overheated levels when MVRV surpasses 3.0, with long-term holders starting to sell. With MVRV remaining below 2.5 and 3.0, it suggests that BTC still has more room for growth.

Bitcoin’s Net Unrealized Profit/Loss (NUPL) ratio, which measures the net unrealized profit or loss of all Bitcoin holders, sat at 58% or 0.58, which is a belief/denial zone. This indicates that BTC is yet to be overheated, since the NUPL has not hit 0.75. When NUPL enters an extreme euphoria zone, it leads to profit-taking, as holders start to worry about potential correction.

Bitcoin’s Pi cycle top, which is a technical analysis tool used to predict market tops, indicates that BTC is far from overheated. Notably, BTC enters an overheated zone when the 111 Day Simple Moving Average (SMA) crosses above 2x 350 Day SMA. This has not happened over the past four years. The last crossover was recorded in 2021. At press time, the 350 x2 SMA sat at around $160,000, while the 111 DSMA was at $91,000. Thus, there was still more room for growth until the two lines meet.

In summary, although Bitcoin’s Price Temperature has spiked to near overheated levels, there’s still more room for growth. Other market indicators, such as MVRV, NUPL, and the Pi cycle top, suggest that BTC could continue the rally. A continuation of the current uptrend could see BTC hit $120,000. However, if a correction emerges as some holders turn to profit realization, BTC could retrace to $106,000.