Key takeaways:
Bitcoin could turn parabolic if prices move above $115,000 to liquidate more than $7 billion in short positions.
Onchain indicators enter overheated territory, suggesting prolonged profit-taking from BTC investors.
Bitcoin (BTC) showed strength on May 27, briefly tagging $110,700 after a strong US equities market open and the Trump Media and Technology Group’s announcement that it would raise $2.5 billion for a Bitcoin treasury.
Bitcoin’s bullish momentum aligns with the favorable US financial conditions, as noted by Ecoinometrics. The macroeconomic-focused Bitcoin newsletter highlighted that the National Financial Conditions Index (NFCI) shows a rapid shift to ultra-loose territory after a tightening phase in February 2025.
The NFCI, published by the Federal Reserve Bank of Chicago, tracks stress in the financial system by aggregating measures like credit spreads, leverage, and funding conditions. When the index moves into looser territory, it reflects easier access to capital and reduced market stress—conditions that typically encourage risk-taking behavior among investors.
For high-beta assets like Bitcoin, such periods often coincide with price rallies as capital flows into speculative markets.
Ecoinometrics mentioned that within four weeks, liquidity has returned, creating a supportive macroeconomic environment for risk assets like Bitcoin. The newsletter noted,
“That’s the kind of macro backdrop where Bitcoin thrives. Bitcoin’s rally to new highs didn’t come out of nowhere. It’s tracking the same pattern we saw since 2023: easing conditions → capital rotation → risk-on.”
With Bitcoin just 2% away from its all-time high price, data from CoinGlass indicates that the probability of a short-squeeze remains high due to significant sell-side liquidity. As illustrated below, if Bitcoin breaches $115,000, over $7 billion in short positions could get liquidated, triggering a cascading effect that pushes prices higher.
Related: Bitcoin shows signs of ‘easing momentum’ but traders still expect $150K
Onchain data shows Bitcoin in ‘overheated zone’
While the overall momentum remains bullish, Bitcoin’s rally has pushed the market into a zone where historical patterns urge caution. Two key onchain indicators—Supply in Profit Market Bands and the Advanced Net UTXO Supply Ratio—are flashing signals consistent with prior market tops.
The Supply in Profit Market Bands metric tracks how much of the circulating BTC supply is currently in profit. As of late May 2025, this figure has surged to 19.4 million BTC, nearing historical extremes and entering the “Overheated Zone.” Previously, BTC prices tested this zone on Dec. 17, 2025, which was followed by a price correction to $93,000 from $107,000.
Simultaneously, the Advanced Net UTXO Supply Ratio (NUSR), which compares profitable versus unprofitable UTXOs (unspent transaction outputs), is brushing against its historical ceiling around 0.95—a level frequently preceding sell signals. Red markers on the chart indicate prior instances when such conditions led to local price tops or prolonged consolidations.
The above data does not guarantee an immediate drop, but these metrics suggest a high probability of increased volatility and profit-taking in the short-term.
Related: Bitcoin 2024 conference sparked 30% price crash — Can bulls escape this year?
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
