Bitcoin (BTC) continues to hold firm within a bull market, but some key on-chain metrics suggest the cryptocurrency may be approaching a short-term peak. According to a new report by CryptoQuant, several indicators tied to Bitcoin’s demand growth are now “overheating,” potentially signaling a price correction before the next leg of the rally.
Whale Activity and Demand Growth Raise Caution Flags
CryptoQuant data reveals that Bitcoin demand has surged significantly, with approximately 229,000 BTC added over the past month—close to the 279,000 BTC recorded during the December 2024 rally, when BTC first crossed $100,000. Notably, BTC balances held by whales have also increased by 2.8%, indicating heavy accumulation.
However, such rapid demand growth often precedes a cooldown period. Analysts warn that sustaining Bitcoin’s rally requires consistent demand, and signs of slowing whale accumulation could temporarily stall upward momentum.
Unrealized Profit Margins Near Critical Levels
Another key metric that appears to be overheating is the Bitcoin Traders’ Unrealized Profit Margin, which has recently touched 32%—just shy of the 40% level often associated with price resistance. Historically, Bitcoin’s momentum has slowed when this margin crosses below its 30-day moving average, which currently sits at 19%.
This pattern suggests BTC may face short-term headwinds, especially if unrealized profits continue to increase without new inflows of demand.
Bitcoin Corrects Below $104K But Bullish Trend Intact
Following its recent rally past $111,000, Bitcoin has retraced slightly, falling below $104,000 at the time of writing—a 2% decline over the past 24 hours, according to CoinMarketCap.
Despite the short-term drop, CryptoQuant maintains a bullish outlook. Their proprietary Bull Score Index remains at 80, well above the bullish threshold of 50. Historically, as long as this score stays elevated, BTC has shown the potential to resume its upward trend after brief corrections.
$120K Remains the Key Resistance Target
Looking ahead, analysts point to $120,000 as the next major resistance zone. This level aligns with the upper band of the Traders’ On-Chain Realized Price, where the unrealized profit margin reaches 40%—a historically significant resistance during bull cycles.
While some profit-taking is occurring, analysts note that it remains modest compared to previous bull markets. There is currently no strong evidence of a trend reversal, and market conditions continue to support Bitcoin’s long-term bullish trajectory.
