Key Points
- Bitcoin’s social activity has significantly increased with a surge in buy calls on social media.
- Despite this, the cryptocurrency is at risk of a short-term correction due to potential overvaluation.
Bitcoin is experiencing a surge in buy calls on social media platforms, indicating a positive sentiment towards the cryptocurrency.
However, despite this increased interest, the coin is at risk of a short-term correction.
Bitcoin’s Social Activity and Market Value
There’s been a significant uptick in Bitcoin’s social activity as the cryptocurrency market anticipates the approval of the spot Ethereum (ETH) Exchange-Traded Fund (ETF).
This surge in social media discussions has been mostly positive, with more buy calls than sell calls being made.
However, these buy calls are often due to speculation and not backed by a corresponding demand for the coin.
Moreover, Bitcoin’s Market Value to Realised Value (MVRV) ratio returned a high value of 153.19% at press time.
This suggests that the asset may be overvalued, which could lead to a spike in selling pressure as investors are more likely to take profits when the potential return is high.
Funding Rates and Potential Correction
The rise in Bitcoin’s funding rates also heightens the likelihood of a short-term correction in its price.
On 21st May, the coin’s funding rate across cryptocurrency exchanges was 0.018%, its highest level in a month.
While a high futures funding rate is generally a bullish signal, indicating a strong demand for long positions, it may result in forced selling by leveraged long positions when it becomes unsustainable.
This could trigger price swings and result in unexpected price drops.
