3 warning signs suggest the Bitcoin price rally is overextended
It’s a classic euphoria setup on Bitcoin markets Thursday as traders flip long BTC in ever larger numbers.
Bitcoin (BTC) faced fresh doubts over the strength of its bull run on Oct. 7 as analysts eyed a potential reversal of Wednesday’s short squeeze.
Data from Cointelegraph Markets Pro and TradingView tracked BTC/USD as it hovered near $54,000 after failing to establish support at the $55,000 mark.
The previous day had seen an abrupt surge to highs of $55,700 for Bitcoin, which was accompanied by major buying pressure.
As funding rates flip positive across exchanges, however, concerns on Thursday focused on what could end up being an opposing move lower.
Funding rates turning overly positive suggest that the market is expecting further upside and that significant value is long BTC. Under such circumstances, an unwinding of positions could hasten and intensify a downward move, should it begin.
The mood among investors was echoed by sentiment data, with the Crypto Fear & Greed Index hitting 76/100 on the day, representing “extreme greed.”
“Investors are extremely greedy towards BTC right now,” trader and analyst Rekt Capital warned.
While under $10,000 from all-time highs at one point, Bitcoin additionally faces significant resistance levels at $58,000, $60,000, and more on the way to returning to price discovery.
As Cointelegraph reported, October is slated to close just below the highs, while November could see a return to lower levels before a December finale obliterates current records.