Monitoring Bitcoin’s Stability as it Approaches $100K: Key Factors to Consider

Key Points

• Bitcoin’s price momentum and overbought conditions suggest potential overheating.
• High SOPR values, overleveraged market, and spiking Funding Rates indicate caution may be warranted.

Bitcoin has managed to pull itself back into the $98,000 price range, maintaining a positive Funding Rate for weeks on end.

As Bitcoin [BTC] teases the $100,000 mark, speculations about the sustainability of its current rally are rife.

Bitcoin’s Price Momentum and Overbought Conditions

The daily BTC/USD chart showcases Bitcoin’s steep upward trajectory, with the coin breaking out from consolidation near $65,000 just a few weeks ago.

The Relative Strength Index (RSI) stood at 78.6, signifying Bitcoin’s presence in the overbought territory.

In addition, Bollinger Bands depicted the price trading near the upper limit, implying increased volatility.

Bitcoin SOPR Indicates Profit-Taking

The Spent Output Profit Ratio (SOPR) chart provides a clearer insight into market behavior.

SOPR, which gauges whether coins moved on-chain are profitable, has been rising steadily alongside Bitcoin’s price.

A sudden drop in SOPR could signal increased selling pressure, potentially triggering a broader correction.

An Overleveraged Market

Another warning sign comes from the Bitcoin Funding Rates chart, which depicted a sharp uptick across major exchanges.

Funding Rates are positive when long positions dominate the market, and excessively high rates suggest over-leveraging.

Should a correction occur, overleveraged positions would likely exacerbate the sell-off through liquidations, adding downward pressure.

While Bitcoin’s rally is undoubtedly historic, the convergence of overbought RSI levels, high SOPR values, and spiking Funding Rates signaled potential overheating.

A healthy correction could reset the market, paving the way for sustainable growth rather than speculative mania.

While Bitcoin could continue its upward trajectory, the risks associated with its rapid ascent cannot be ignored.