Bitcoin (BTC) shattered expectations by reaching a new all-time high of $111,970 on May 22. But as price swiftly pulled back to $110,700, traders are asking: is this a healthy rally—or are we entering overheated territory?

📈 Analysts Say: Not Overheated Yet

Despite the rapid climb, on-chain data suggests we may not be in the danger zone just yet. CryptoQuant analyst Crypto Dan points to relatively tame funding rates and limited profit-taking as signs that BTC still has room to grow.

• Funding Rates: While long positions have increased, they’re still modest compared to previous peaks.
• Short-Term Holder SOPR: At 1.02, this suggests only minor profit-taking by short-term investors—far below levels seen in past corrections.
• Whale Activity: Large holders are not aggressively cashing out, a sign of continued confidence.

🧠 MVRV Z-Score Still Below Red Zone

Another key indicator, the MVRV Z-score (which measures how overvalued BTC is), remains below the red-hot territory. Currently at 2.8, it’s well below the threshold that typically signals market tops. Historically, major sell-offs only began when this score entered the red zone.

📊 RSI Shows Mixed Signals

Bitcoin’s Relative Strength Index (RSI) tells a more cautious story. On the 12-hour and daily charts, RSI has entered the overbought zone (above 70), while weekly and 4-hour charts remain neutral.

⚠️ The Crypto Fear & Greed Index currently sits at 78—“extreme greed.” Historically, such sentiment precedes corrections, as seen in late 2024 when BTC fell from $108K to $74K shortly after similar conditions.

🤔 So, Buy or Wait?

On-chain fundamentals support a bullish continuation, but market sentiment is flashing some caution signs. While the trend remains upward, short-term traders may want to be prepared for potential volatility.

This article does not constitute investment advice. Always do your own research and consider your risk tolerance before making financial decisions.