Bitcoin’s impressive rally has hit a roadblock as it retreated from its record high and dropped below the $69,000 mark. Analysts at IntoTheBlock are warning that the market is showing signs of being overheated and could be due for a correction. Lucas Outumuro, head of research at IntoTheBlock, pointed to the increasing leverage in both decentralized finance (defi) and centralized finance (cefi) markets as a concerning factor. He highlighted the surge in meme tokens and the acceleration of leverage behind large-cap assets, particularly in derivatives markets. Funding rates on centralized exchanges are unusually high, indicating excessively bullish positioning. The surge in leverage also extends to defi platforms, with Aave v3 on Ethereum witnessing a doubling of aggregate debt issued year-to-date. Outumuro predicts a potential “Great Unwinding” in the crypto market, with a possible 20% correction as leverage in the system resets. The exact timing of this correction is uncertain, but the escalating borrow costs serve as a warning for crypto investors to exercise caution. As of now, Bitcoin is trading at $67,819.
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Bitcoin retreats from record high amid analyst warnings of 20% market correction
