Bitcoin (BTC) is currently priced at $68,319 as of March 15th, experiencing a 4.5% decrease in the past 24 hours. This decline is attributed to the “overheated” conditions in the cryptocurrency market, according to a report by IntoTheBlock, an on-chain analytics firm.
On March 14th, BTC reached its all-time high of $73,835, but it quickly dropped by 9% to a new weekly low of $65,565 on March 15th. This price drop has led to a sell-off across the market, causing the global crypto market cap to decrease by 4.1% to $2.59 trillion, as reported by CoinMarketCap.
Other major cryptocurrencies have also experienced losses in the past 24 hours. Ether (ETH), the second-largest cryptocurrency by market capitalization, has dropped by 5% to $3,708. Tokens like BNB, XRP, Cardano, and Dogecoin have also seen decreases in their values, ranging from 2.3% to 8%. However, Solana (SOL) is an exception and has recorded an 8% increase in the last 24 hours.
Earlier, Cointelegraph had warned of a potential correction in the BTC price due to the “overheated” market conditions. This information is supported by data from IntoTheBlock, which highlights the increasing leverage in the crypto market, indicating a possible correction.
According to IntoTheBlock’s On-chain Insights newsletter, the funding rates on Binance and Bybit for Bitcoin perpetual swaps have reached their highest levels since October 2021. These funding rates, which are paid every 8 hours, translate to an annualized cost of 93% and 168% for going long on Bitcoin.
Additionally, Bitcoin futures open interest on all exchanges reached its all-time high of $35.55 billion on March 15th. While high open interest reflects new buying in the market, it also poses a warning sign for the market when the positioning in derivatives becomes overly bullish.
The high leverage conditions are not limited to centralized exchanges but have also extended to decentralized finance (DeFi) networks. The total debt on all DeFi protocols has doubled in 2024, increasing from $2 billion in January to $4.15 billion on March 14th. The aggregate amount of debt issued through Aave v3 on Ethereum has also doubled year-to-date.
IntoTheBlock warns that the DeFi ecosystem is accumulating too much risk, which could result in a price correction in the near future.
Despite these market conditions, Bitcoin holders are currently sitting on profits. The average 90-day return for the top 20 crypto-assets (excluding stablecoins) is 103%. According to data from IntoTheBlock, 86% of all Bitcoin holders are currently in profit, indicating a potential continued sell-off as investors book their profits.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment decisions.