The post Bitcoin – Here’s why this analyst is expecting the ‘overheated market’ to correct appeared on BitcoinEthereumNews.com.

Sentiment index at 69 signals optimism, but caution is advised Historical patterns pointed to correction risks near market highs As the market enters 2025, investor sentiment is at a high, fueled by growing optimism and a renewed sense of opportunity. While enthusiasm is building, it remains well below the extreme levels seen during previous market booms. Nevertheless, experts are cautioning that the risk of a correction, particularly in Bitcoin [BTC] and other major cryptos, is increasing as the market continues to gain momentum. With this in mind, it’s crucial for investors to stay vigilant, carefully monitoring key indicators and being alert to early signs that could signal a shift in market dynamics. Fear and greed index – What happens at 95? Source: Binance Square At press time, the index stood at 69 – A strong sign of optimism but still far from the red zone. Analysts believe that when the index touches 95, the market typically enters a phase of overheating, marked by speculative excess and euphoria. Historically, this threshold has served as a warning signal, indicating that a correction or downturn may be imminent. Such levels often precede shifts in investor behavior, as cautious optimism gives way to unsustainable exuberance. Key indicators to watch for a potential correction As the market approaches overheated conditions, Adler made note of several key indicators that could provide early warnings of a correction. Long-term holder sales Historically, increased selling activity by long-term holders has signaled the start of market corrections. December 2024 saw a slight uptick in LTH profit-taking, echoing patterns observed before the 2021 and 2017 market peaks. A sharp rise in these sales would suggest that experienced investors are offloading ahead of a potential downturn, undermining market confidence. BTC ETF outflows After record-breaking inflows in late 2024, Bitcoin ETFs have seen…

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Filed under: News - @ January 12, 2025 8:08 am