These BTC Overheating Signals And Correction Risks Are Critical: Here’s Why

These BTC Overheating Signals And Correction Risks Are Critical: Here’s Why

Bitcoin (BTC), the leading cryptocurrency, has been on a relentless bull run, breaking its all-time high twice in one week as its price crossed the $70,000 mark on the Binance crypto exchange on Friday. However, recent Cryptoquant data shows that overheating signals have begun to emerge.

Signals Of Overheating

CryptoQuant’s Bull-Bear Market Cycle Indicator has signaled an overheated-Bull phase for the leading digital asset. This indicator, which tracks the balance between bullish and bearish sentiment in the market, has historically been a reliable predictor of market cycles.

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Another overheating signal is the profitability of BTC miners, which has skyrocketed to levels not seen since December 2023. With mining operations enjoying unprecedented profitability, some analysts warn that miners may be tempted to sell off their holdings, adding further downward pressure on BTC’s price.

Also, unrealized profit margins have soared to 57%, historically preceding market corrections. This suggests many traders may soon look to cash out, triggering a sell-off.

Adding to the apprehension, short-term BTC holders have begun offloading their holdings at the highest profit margins since February 2021. This trend, if sustained, could exacerbate selling pressure in the market, leading to a sharp downturn in the crypto’s price.

Expert Predicts A 15% Price Retracement

Furthermore, Daniel Yan, co-founder of Matrixport, emphasizes the likelihood of a significant correction, advising investors to heed his earlier warnings. Yan anticipates a retracement of around 15% by the end of April, which would drive BTC’s price down to $52,000-$53,000.

He added that there are no specifics regarding the timing and magnitude of this correction since there are macroeconomic factors to consider. One of such factors is the release of gross domestic product figures.

Despite the uncertainty surrounding BTC’s short-term price outlook, long-term fundamentals remain strong, with growing institutional adoption and increasing mainstream acceptance bolstering confidence in the digital asset. Whether the current overheating signals are a mere blip or herald, the onset of a more significant correction remains to be seen.

Bitcoin’s Node Count Reaches All-Time High

Recent data by Bitnodes indicates that the relative size of the Bitcoin peer-to-peer network has surged to new heights of more than 18,450 reachable nodes. According to the Bitnodes chart, the current count of reachable nodes significantly increased from the 11,272 nodes it was eight years ago.

IPv4 nodes account for 28.6% of the reachable nodes, while IPv6 nodes represent 7.4% of the total. However, the most striking figure is the prevalence of .onion nodes, which comprise 63.9% of the total node count. This dominance of .onion nodes underscores the growing interest in privacy-centric solutions within the Bitcoin community.

User Agent Distribution

A closer look at the distribution of reachable Bitcoin nodes across leading user agents reveals that approximately 40.5% are running Satoshi version 26.0.0, while versions 25.0.0 and 24.0.1 account for 24.8% and 8.7% of the network nodes, respectively. Others make up the remaining 26% of the network.

ASN And Country Distribution also provided data on the distribution of reachable Bitcoin nodes across leading Autonomous System Numbers (ASNs) and countries. Regarding ASNs, TOR leads the pack with 64.9%, followed by Hetzner (5.7%) and Digital Ocean (1.9%).

Regarding countries, aside from users from non-categorized countries that accounted for 64.1%, Germany and the United States are the top contributors, with 9% and 8.8% reachable nodes, respectively.

Protocol Versions And Propagation Time

The distribution of reachable Bitcoin nodes across leading protocol versions sheds light on the network’s technical evolution. Most nodes are running protocol version 70016 (96.2%), with version 70015 (3.6%) a distant second.

This indicates high adoption of the protocol’s latest versions, reflecting the ongoing efforts to improve the network’s efficiency and scalability. This data also showed that the propagation time for transactions and blocks has decreased significantly over the years, indicating improvements in the network’s efficiency and reliability.

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Rudy Harris
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Rudy Harris

Rudy Harris, a dynamo in crypto journalism, intricately unpacks the multifaceted world of digital assets. Renowned for his analytical depth and clear exposition, Rudy's articles serve as an essential compass for those navigating the intricate corridors of blockchain and cryptocurrency, solidifying his stature as a trusted expert.

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