Bitcoin Market Warning Issued as Speculation Peaks, What's Next for BTC?

The Bitcoin (BTC) market is flashing early warning signals, with on-chain analyst Willy Woo urging caution amid surging speculation.

According to Woo, speculation is "going nuts" on Bitcoin (BTC) at a time when the SOPR indicator suggests that there are plenty of investor profits to take. This could cause a short-term drop in BTC, with Woo adding that the current scenario reminds him of the saying, "Be fearful when others are greedy."

Woo points to a subtle yet important shift in market dynamics, with the "Bitcoin vector" structure shift signal beginning to show the first signs of a bearish pivot.

Another concern lies in Bitcoin's capital flows. Woo pointed out that over the past three days, capital inflows into the Bitcoin network have been unusually flat, which is surprising given the recent price spike.

"Capital flows into the network was very flat the last 3 days, this is an unusual lull in buying on our run from $75,000 to $112,000," Woo noted, adding that a "lot comes down to how much buying happens this week when US markets open after a long weekend."

$114,000 next in line to liquidate shorts

Despite the warning signal, the broader picture remains tilted in favor of bulls, with Woo suggesting that Bitcoin could skyrocket to $114,000 if buying follows through this week. "Still, the broader picture is bullish with risk signal dropping. If buying follows through this week, $114,000 is next in line to liquidate shorts," the analyst stated.

Woo suggests that, despite the positive view, there is currently an opening for a bearish pivot. The analyst added that if Bitcoin does not see further highs soon, it might be setting up for bearish divergences on longer-range charts at a time when capital inflows have been weaker than usual, with speculation running too hot. If this happens, Bitcoin might need to "wear out another wave of profit taking," Woo noted.

At press time, BTC was up 0.19% in the last 24 hours to $109,870, extending its gain from May 24 into the fourth day. Bitcoin saw a sharp spike in the most recent hour to highs of $110,829 before slightly retracing.