Assets covered: Bitcoin (BTC)

Metrics used: Funding Rate, Social Volume, Weighted Social Sentiment, Active Addresses, Mean Dollar Invested Age, Mean Coin Age, MVRV.

Summary: We are witnessing a strong BTC rally through a bunch of warning signs and red flags.

Funding Rate:

According to Bitmex, BTC funding rate is mostly in the positive (shorts are paying for longs) , indicating that there's more long pressure than short.

Looking at past history, we can observe that usually when there's spikes in the funding rate, BTC's price does the opposite and rekts all longers.

Huge spikes in positive funding rates (with a rising price) warns of a possible Long liquidation coming. As usual, the crowd comes late and gets punished.

There's probably some further room for BTC to grow, but it's worthwhile to keep an eye on the sudden spike in positive funding rate (if it happens), as a warning sign for possible top.

Above is what Sanfam said a couple of weeks ago. Here we are.

Social Volume:

... a sudden flip of the crowd to Longs and spike in Social volume will likely be the top as the crowd gets excited.

As you say, Sanfam. Can we measure excitement?

Weighted Social Sentiment:

Bitcoin has expectedly become a very positively regarded subject on Twitter and other social platforms. The crowd is still quite positive currently, and we consider this to be confidently bearish territory based on history.

Network Activity (Active Addresses):

The downtrend in Bitcoin’s DAA can be viewed as a negative sign, pointing to less ‘market blood’ entering the scene and declining speculative interest often required for a sustained price rally.

Mean Dollar Invested Age and Mean Coin Age:

A drop in MDIA tends to signal a local top is coming soon. Well, ok, it's telling the same for almost a month. Redistribution is still well on it's way in general.

MVRV:

Very high. The higher the MVRV ratio, the more likely it is that BTC holders will begin to exit their positions and take profit. The fact that these (and other) MVRV ratios are now reaching their local extrema points to an increased risk of short-term sell-offs should Bitcoin’s holders begin to feel anxious about the coin’s near-term prospects.

Summing up

Bitcoin’s latest on-chain and social data does point to several yellow flags starting to form in the past weeks, including high social volume, bullish sentiment, high MVRV and pretty high in derivatives (funding rate), all relatively bearish signals.

But! We've seen them before. And they did not hurt Bitcoin yet.

Should it break ATH and correct? Or correct and push to a new ATH? We'll find out soon.

Take care.

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Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.