Bitcoin prices have rebounded recently, with more than 90% of holders making profits, but the risk of market overheating has increased and it may pull back to 63,000.
90% of investors are profitable, Bitcoin market is overheated
Recently, the price of Bitcoin has rebounded sharply, rising by more than 7.5% in seven days, reaching a ten-week high of $68,260 on October 18, and then falling back. This rise has made more than 90% of Bitcoin holders profitable. As of October 16, only 8.5% of Bitcoin investors are losing money, which means that 91.5% of the supply is profitable. At the time of writing, the price of Bitcoin is $68,160, and it has repeatedly tested this point.
However, historical experience shows that when most holders are in profit, the market is often overheated and prices may fall back. A high proportion of profitable holders may choose to take profits at this time, resulting in increased selling pressure, which in turn affects price trends.
Three major signals indicate that Bitcoin may pull back
The latest Bitcoin price recovery was driven by the recovery of inflows into spot Bitcoin exchange-traded funds (ETFs), which have exceeded $929 million in the past two days. Judging from the following three major signals, if Bitcoin does not break through and stabilize the key level of $68,000 in the near future, it may face a correction.
1. A high proportion of holders profit, and the risk of market overheating increases
When the price of Bitcoin broke through $67,000, many short-term holders turned unrealized losses into profits. The percentage of holders who made profits reached 91.5%, indicating that market sentiment was high. However, this may also indicate that the market is overheated and a price correction may occur at any time.
2. Bitcoin futures open interest hits record high
On October 16, Bitcoin futures open interest reached a record high of $39.49 billion. CME Bitcoin futures open interest also reached 174,500 Bitcoins, equivalent to about $12.3 billion. The surge in open interest may lead to increased market volatility, especially in the case of high leverage, where prices are prone to drastic fluctuations.
3. The technical resistance level of $68,000 is difficult to hold
From a technical perspective, Bitcoin faces strong resistance at $68,000. On July 29, the price was rejected at this level and subsequently fell 27% to $49,577. If Bitcoin fails to successfully break out and stabilize above this resistance level, the price may pull back again. A large accumulation of sell orders above $68,000 strengthens the impact of this resistance zone.
Falling back to 6.3?
If Bitcoin fails to pull back to $63,000 in the next few days, the bears may get excited only if Bitcoin effectively falls below $58,000. Any other smaller pullbacks are just market noise.
Investors holding long positions are advised to remain patient and avoid chasing highs due to fear of missing out (FOMO). Price corrections are normal, especially when futures open interest reaches new highs, and high leverage may lead to sharp market fluctuations.
Bitcoin has remained in a downward channel for several months. If it wants to go further up, it needs to continue to test pressure and resistance levels.
Despite the possibility of a pullback, we should remain optimistic about Bitcoin’s long-term trend.
As long as it can successfully break through the key resistance level, Bitcoin is expected to hit new highs in the future. Pay close attention to market dynamics and operate with caution.
