Bitcoin Rally Flashes Red Flags: New Highs, But Fewer Hands Are Holding the Rally

Core Insights - Bitcoin's recent price surge to an all-time high of $125,708 may not reflect strong market fundamentals, as active network addresses have decreased, indicating a negative divergence between price and on-chain activity [1][2][3] - The decline in active wallet addresses suggests that the rally is driven more by speculative trading rather than broad market participation, raising concerns about the sustainability of the price increase [2][3][6] Market Activity - The daily count of active wallet addresses, based on a 14-day moving average, is nearing its lowest level since April 2020, which is a concerning sign for the market [2][3] - A sustainable price increase typically requires a rise in network activity, which is currently lacking, indicating potential instability in the current bull run [3][6] Futures Market - Bitcoin's futures open interest has reached a year-to-date high of $92.14 billion, reflecting a 10% increase since October 1, which may signal an overheated market [4][5] - High leverage in futures trading can lead to significant corrections if market sentiment shifts, as minor liquidations could trigger steep price declines [5] Price Stability Concerns - The current trend of declining network activity alongside rising prices is viewed as a warning sign, suggesting that the price may lack strong fundamental support [6]