Cryptocurrency Market Shows Overheating Signs with Potential Correction Ahead

The market sentiment is leaning towards greed with an index value of 75, and Bitcoin's price stands at $119,422. Funding rates on Deribit for Bitcoin have increased to 0.04%, signaling potential overheating. A short position on ADA worth $1.02 million was liquidated on Binance at a lower price of $0.8387. Inflow into spot ETFs from July 21-25 amounted to $72.6 million for Bitcoin and $1.85 billion for Ethereum. CoinShares reported a weekly inflow of $1.9 billion into crypto funds, although Bitcoin experienced an outflow of $175 million, while Ethereum saw inflows of $1.59 billion, Solana $311 million, and XRP $189 million. Major centralized exchanges saw inflows in PENDLE (+$4.75 million), UNI, and LINK, with outflows observed in GLM (-$2.28 million), AAVE, and CRV. CryptoQuant indicates that MVRV suggests a potential correction by the end of August. Institutions and whales are actively accumulating: SharpLink purchased 77,210 ETH for $295 million, holding a total of 438,017 ETH. An anonymous actor added 4.68 million USDC and opened a short on ETH worth $20,000, resulting in a liquidation of nearly $4,000. Metaplanet from Japan acquired an additional 780 BTC, totaling 17,132 BTC. French firm Capital B, UK-based Smarter Web, and Swedish H100 Group continue to buy Bitcoin. CZ’s holdings are estimated to be at least $75 billion after Bitcoin and BNB prices surged to $850.70. On the macroeconomic front, Trump Media, linked to former President Donald Trump, invested $300 million in Bitcoin options, with total crypto assets around $2 billion. US Democratic senators are examining FHFA actions regarding the consideration of crypto assets in mortgage evaluations. Renowned investor Ray Dalio considers that Bitcoin could comprise up to 15% of a portfolio amid rising US debt levels. Tether has printed another $1 billion USDT and is preparing to launch a new dollar-pegged stablecoin; the market cap of XAUT continues to grow. Legally, Tornado Cash co-founder Roman Storm has requested $1.5 million to cover court expenses. Rumors suggest that analysts anticipate Bitcoin may undergo a correction of 12-25% if funding rates and MVRV continue to rise. In summary, the market exhibits signs of overheating with significant institutional activity and inflows into major assets, but caution remains as indicators hint at a possible correction approaching the end of August.