A CryptoQuant analyst, aytekin, has shared insights on Bitcoin’s market sentiment, shedding light on crucial metrics for investors. As Bitcoin pursues its all-time high (ATH), aytekin highlights two charts that are often overlooked but offer valuable information: the funding rate and the Spent Output Profit Ratio (SOPR).
According to aytekin, the funding rate, which tracks the cost of trading in futures markets, can indicate market optimism. However, as of now, funding rates are not signaling extreme behavior. Instead, they suggest a more moderate market condition.
In contrast, the SOPR metric provides insight into profitability trends, particularly when smoothed using a 30-day moving average. Current SOPR levels indicate that Bitcoin’s market is showing signs of profitability but does not exhibit symptoms of overheating.
Aytekin notes that while high-profitability levels are often associated with extreme spikes above 95%, historical data suggests that such conditions typically last up to a year within broader market cycles. Therefore, it is essential to consider the duration of these high-profitability levels rather than just their magnitude.
The analyst also emphasizes that profitability alone is not inherently risky unless it coincides with supply movements within the market. As Bitcoin’s market capitalization sits above $1.6 billion and its 24-hour trading volume exceeds $90.6 billion, investors should take a closer look at these metrics when assessing the asset’s current sentiment.
As of now, Bitcoin is trading for $81,838, up by 2.4% in the past day, marking a slight decline from its ATH of $82,379 earlier today.
Source: https://www.tradingview.com/news/newsbtc:4f2f3d2d5094b:0-is-bitcoin-now-overheating-key-metrics-reveal-crucial-insights-for-investors