Bitcoin’s Drop from ATH Signals Overheated Web 3.0 Market

Bitcoin (BTC) is currently priced at $68,319 on March 15, showing a 4.5% decrease in the last 24 hours as the crypto market experiences “overheated” conditions, as reported by IntoTheBlock, an on-chain analytics firm.

According to data from Cointelegraph Markets Pro and TradingView, BTC’s value declined from its recent all-time high of $73,835 on March 14, dropping by 9% to reach a new weekly low of $65,565 on March 15.

This drop in BTC’s price has caused a sell-off throughout the market, with the overall crypto market cap falling by 4.1% to $2.59 trillion, as per CoinMarketCap data.

The second largest cryptocurrency by market capitalization, Ether (ETH), also saw a 5% decrease in the last 24 hours, now trading at $3,708. Other top tokens, such as BNB (BNB), XRP (XRP), Cardano’s ADA (ADA), and Dogecoin (DOGE), also experienced losses of 2.3%, 7.3%, 5.8%, and 8%, respectively, during the same period.

Meanwhile, Solana’s SOL (SOL) was the only token among the top 10 cryptocurrencies to record gains, rising by 8% in the last 24 hours.

Previously, Cointelegraph cautioned about a potential correction in BTC’s price due to the “overheated” market conditions, as summarized by user TOBTC.

Data from market intelligence firm IntoTheBlock supports this warning, highlighting the increasing leverage in the crypto market as a potential sign of an upcoming correction.

Funding rates soar to record highs in 2021

The latest edition of On-chain Insights by IntoTheBlock reveals that the fees paid by buyers of Bitcoin perpetual swaps to those going short have reached their highest levels since October 2021.

According to the chart below, BTC’s funding rates on Binance and Bybit have surged to 0.06% and 0.09% respectively, with payments made every 8 hours.

These fees equate to an annualized cost of 93% and 168% for those looking to go long on Bitcoin, as stated in the report.

Further data from Coinglass shows that the open interest (OI) for Bitcoin futures on all exchanges reached a record high of $35.55 billion on March 15.

While a high OI indicates new buying in the market, driven by increased inflows into spot Bitcoin exchange-traded funds (ETFs), IntoTheBlock analysts warn that excessively bullish positioning in derivatives can be a red flag for the market.

The DeFi ecosystem is facing a growing accumulation of risk

The use of high leverage is not limited to centralized exchanges, as loans on decentralized finance (DeFi) networks have seen a significant increase.

The chart below illustrates how the total debt on all DeFi protocols has doubled since the beginning of 2024. According to data from IntoTheBlock, the total debt has risen from $2 billion to $4.15 billion as of March 14.

IntoTheBlock also reports a surge in the “aggregate amount of debt issued through Aave v3 on Ethereum,” which has grown by a factor of 2.14 since the start of the year.

Furthermore, the report states that the amount of wrapped Bitcoin (WBTC) supplied to Aave has increased by over 10,000 BTC (equivalent to approximately $700 million) in 2024.

This indicates a rise in demand for leverage in DeFi, resulting in higher rates.

As a result, the firm warns that the DeFi ecosystem may be taking on too much risk, potentially leading to a price correction in the near future.

The Current State of Bitcoin Holders: Profits Galore in the Web 3.0 Decentralized Market

March saw Bitcoin’s price soar to new heights, thanks to the success of spot Bitcoin ETFs in the US, leading to a surge in the overall market trend.

According to IntoTheBlock’s report, the market is currently “overheated,” with the top 20 crypto-assets (excluding stablecoins) seeing an average 90-day return of 103%. This means that the majority of traders have already cashed in on their crypto investments, with independent analyst and X user Ali estimating that profits have reached 70%.

On March 14, Ali shared a chart from CryptoQuant on X, revealing that traders’ unrealized profit margins hit 69% when the price reached above $73,000. This is usually a sign of an upcoming correction as traders take advantage of the high prices to book their profits.

Furthermore, data from IntoTheBlock shows that a whopping 86% of all Bitcoin holders are currently in profit at current prices. This further increases the likelihood of a continued sell-off in the short term as more traders take advantage of the high prices to secure their profits.