Bitcoin and Ethereum bounce back, yet display ‘overheated signals’ according to K33 Research.

K33 Research analysts have stated that the recent decline in Bitcoin’s price indicates an overheated market and a “suboptimal” market structure. In their report titled “Ahead of the Curve,” head of research Anders Helseth and senior analyst Vetle Lunde explained that the steady decrease in Bitcoin’s price, along with high funding rates, has exposed cryptocurrencies to amplified downside volatility caused by leverage. Over the past week, Bitcoin has lost over 13% of its value, reaching an all-time high of $73,835 on March 14. Other cryptocurrencies, such as Ether and BNB Chain’s BNB, have also experienced losses of 17% and 1% respectively. Despite this downturn, futures open interest remains strong, and perps maintain significant premiums. The analysts also noted that shallow or negative inflows into Bitcoin investment products further support the overheated conditions. Inflows into Bitcoin exchange-traded products (ETPs) have been declining, with March 18 seeing a new yearly high daily net outflow of 4,453 BTC. The negative flows primarily stem from outflows from Grayscale’s converted Bitcoin Trust ETF, which saw $642 million leave the ETF on March 18. The other nine new ETFs experienced shallow inflows, with net outflows totaling $154 million on the same day. The analysts cautioned that it is too early to determine whether the spot Bitcoin ETFs have reached a saturation point and if the recent activity represents a regime change. However, the shallowing ETF flows have played a significant role in Bitcoin’s adverse price action. Traders and analysts are closely watching the key support level between $63,500 and $64,500, as breaching this level could lead to further corrections. Analysts Charles Edwards and Peter Brandt have projected a price drop towards $50,000. The Federal Open Market Committee meeting in the United States remains a focal point for the crypto market and all risk assets. It is important to note that this article does not provide investment advice or recommendations, and readers should conduct their own research before making any decisions.