Recently, the price of bitcoin has grown faster than the number of active addresses. This is a sign of short-term market overheating and a likely correction, according to the on-chain Active Address Sentiment Indicator (AASI).
The graph below shows the yellow line crossing the upper limit of the range of changes in the number of active addresses (red dotted line).
This, according to the description of the indicator, is a sign of a short-term overheating of the market.
“Under extreme market conditions, the 28-day price change (orange line) moves aggressively beyond the red and green dotted lines. This usually happens during a market crash or in the final stages of a bull cycle,” the LookIntoBitcoin website explains.
In contrast to AASI, the long-term MVRV Z-Score crossed the upper boundary of the deep oversold zone at 0.1. This is a signal about the likely passage of the “bottom” of the market cycle.
An improvement in investor sentiment is also signaled by the Net Unrealized Profit/Loss metric (NUPL). The indicator moved into the “hope/fear” zone, heading towards “optimism”.
At the time of writing, Bitcoin is trading around $22,770. Over the past 24 hours, the rate of the cryptocurrency has decreased by 2.4%, according to CoinGecko.
Earlier, Glassnode analysts concluded that it would take some time for the Bitcoin price to reverse.
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