aytekin466
Bull Market Issues
Bitcoin investors' questions never end. We always think about when it will reach a new all-time high (ATH), and once it happens, we start asking when it might top out. Fortunately, we have many tools to track whether the market is overheated or not. In this analysis, I want to mention two charts that I pay close attention to and two other charts that I pay less attention to Two charts that I think may be misleading for tracking the market are open interest and supply in profit. Open Interest: Establishing a cause-and-effect relationship between price and open interest is challenging. While we may think that price reacts to open interest levels, historical data shows that open interest doesn’t drive price as much as price drives open interest. Additionally, as the futures market and BTC adoption grow, higher open interest levels are expected in the coming years Supply in Profit: This metric shows the overall profitability of the BTC network. It correlates with BTC's nominal price, so when BTC reaches an ATH, profitability often spikes to extreme levels (above 95%). If extreme profit levels triggered major sell-offs, reaching new highs would be challenging. Instead of focusing solely on profit levels, it’s helpful to consider how long extreme profitability can persist. As shown in the chart, profitability can remain at extreme levels for up to a year, which makes sense within the broader market cycle Now, here are two charts that I find useful for assessing market conditions: Funding Rate: This metric is useful for identifying when the market is overly bullish, which can signal that a top is near. I prefer monitoring the funding rate over open interest to navigate the market. The current level is nowhere near an extreme. SOPR (Spent Output Profit Ratio): Profitability alone is not risky unless supply in profit starts moving. To reduce noise, I’ve used the 30-day moving average of SOPR in the chart. The current level also does not indicate an overheated market