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Bitcoin Rebound Signals Healthier Bull Market Without Overheating, Analyst Says

Unlike previous market rallies, the latest rebound in Bitcoin (BTC) – pushing it from a potential cycle low of $74,508 on April 6 to slightly above $100,000 at the time of writing – is characterized by healthier price movement.

Current Bitcoin Rally Not Showing Signs Of Overheating

According to a recent CryptoQuant Quicktakes post by contributor avocado_onchain, last year’s BTC bull cycle – which saw the leading cryptocurrency create and break multiple all-time highs (ATHs) – was accompanied by sharp spikes in Binance market buy volume and funding rates.

Notably, a sudden increase in funding rates was twice followed by a sharp price pullback due to overheating. In this context, overheating refers to excessive bullish leverage in futures markets that drives up the cost of long positions, signalling overly aggressive sentiment that often precedes a market correction.

The following chart illustrates these corrections triggered by excessive leverage in BTC futures. Specifically, boxes 1 and 2 show sharp rises in Binance funding rates, initially accompanied by price increases, then extended periods of correction.

cq1

However, the current rally appears different. According to avocado_onchain, Bitcoin’s ongoing rebound is occurring without an overheated funding rate. In fact, Binance market buy volume is trending downward – as shown in box 3 of the chart – which contrasts with previous bull cycles.

The analyst argues that these are signs of a healthier rally, as earlier bull runs were marked by overheated funding rates and abrupt corrections, which weakened investor sentiment. In contrast, the current rally has maintained relatively stable funding rates, suggesting more cautious and sustainable market behavior.

Despite short-term price fluctuations, market buy volume has shown a steady upward trend since 2023, as marked by the yellow arrow in the chart. The analyst notes:

This indicates that buying sentiment remains favorable for further upside, suggesting that it’s not yet time to consider an exit. We can’t predict exactly when Bitcoin will break its previous high, but current on-chain and market data signals remain very constructive.

Other Indicators Point Toward New ATH

Besides the stable funding rates and encouraging market buy volumes, BTC is also showing several other positive signs pointing toward a new ATH for the flagship digital asset in the near future.

For example, on-chain data shows that long-term holders are not selling, even as BTC trades near its previous ATH of $108,786, recorded in January. This behavior suggests that these investors anticipate further upside.

That said, analysts caution against overly optimistic expectations, noting that Bitcoin may still be far from experiencing a true supply shock. At press time, BTC is trading at $102,393, down 1.4% in the past 24 hours.

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