Bitcoin Price Rally Shows Signs of Overheating Amid Strong Institutional Demand

Bitcoin's price has surged above $80,000 on Tuesday following its strongest weekly rise in over three years. The cryptocurrency has been showing signs of overheating due to profit-taking and falling open interest despite rising prices.

The US-listed spot ETF recorded an inflow of $337 million on Monday, marking the sixth consecutive day of positive flows since August 17. This trend suggests institutional demand continues to support the rally.

However, the derivatives metrics show cautious signs, with BTC's futures Open Interest (OI) falling steadily from 762.24K BTC on August 18 to 725.10K BTC on Tuesday. The decline in OI, despite rising BTC prices and falling trading volume, suggests weakening participation behind the rally.

The Relative Strength Index (RSI) has extended deep into overbought territory near 84 on the daily chart, indicating strong but potentially overextended upside momentum. The next key hurdle for Bitcoin is horizontal resistance around $85,000, where profit-taking could slow the advance.