There are five important warning signs when Bitcoin (BTC) is approaching price peaks, and one of these indicators has signaled red, according to on-chain data service CryptoQuant.
In a post on X on November 19, CryptoQuant shared the top indicators to watch to assess whether Bitcoin's price is approaching unsustainable levels.
MVRV ratio
The first sign is the 'MVRV ratio,' which measures the market value of Bitcoin – the total value of all mined coins – against its actual value, meaning the total selling price of all circulating Bitcoin.
CryptoQuant states that if this ratio exceeds 3.7, it typically indicates that Bitcoin has reached its peak value at that moment. Currently, this ratio is at 2.67 according to data from CoinGlass.
The MVRV ratio of Bitcoin peaked at 7 in February 2021 when Bitcoin surged to a historical price of around $60,000.
Fear & Greed Index rises high
The next indicator to watch is the Fear and Greed Index, which measures market sentiment.
When this index hits 80 out of a total of 100 points – combined with other indicators – Bitcoin may be nearing a local peak, according to CryptoQuant.
This index has surpassed 80 since November 12, reaching a high of 90 on November 17 and 19, the highest level since February 2021.
New money flow into the market
The third sign considers the amount of new money entering the market. Without significant new cash flow, cryptocurrency prices tend to plateau and eventually decline.
CryptoQuant states that the real market capitalization growth chart of Bitcoin is the ideal tool to track the amount of new money entering the market, and currently, this chart indicates that new cash flow remains relatively high, meaning Bitcoin is in a 'bull phase.'
Coin Days Destroyed Indicator
Another indicator assesses whether long-term BTC holders are actively selling. The Coin Days Destroyed tool shows the movement of Bitcoin that has been held for a long time and checks whether these coins are being sold.
If this indicator spikes above 15-20 million, CryptoQuant suggests it could be a short-term bearish signal for Bitcoin. Currently, this indicator shows a level of 15.1 million.
Inter-Exchange Flow Pulse Indicator
The final indicator is the Inter-Exchange Flow Pulse (IFP), which tracks the movement of Bitcoin to and from derivatives exchanges.
CryptoQuant indicates that the IFP still shows a bullish structure, with traders continuing to move Bitcoin to derivatives exchanges to use as collateral.
Bitcoin's IFP is currently around 730,000 and is trending upwards. In previous price surges, the IFP reached highs of 1 million and dropped to as low as 200,000 during the bear market at the end of 2023.
BTC prices have continued to reach new highs since Donald Trump's election, with the latest peak on November 20 exceeding $94,000.
Some analysts believe Bitcoin still has significant upside potential, including the head of digital asset research at VanEck, Matthew Sigel, who forecasts Bitcoin could reach $180,000 next year.