Experienced analysts and media outlets including Cointelegraph recently highlighted some indicators suggesting that the Bitcoin (BTC) price rally could be overextended.

Those bearish views include one from Bollinger bands creator John Bollinger, suggesting traders apply a trailing cease, every bit signs of a "summit" were building upward.

However, it is worth noting that Bollinger Bands and the Fearfulness and Greed indicator are astern-looking metrics. Therefore, those volition normally flash overbought levels whenever at that place'south a 30% weekly rally, such equally the most contempo one.

As crypto annotator TechDev_52 correctly questioned, at that place'southward no way to know whether we're inbound a large potential correction or a rally continuation.

For example, popular YouTuber and trader Nebraskangooner shows that the recent $56,000 summit could have been the upper range of a bullish channel that has guided Bitcoin since late July.

"Greed" mode can last for weeks or months

Going back to the Fright and Greed indicator, below are some examples that such a metric can sustain overbought levels for longer than 3 or four weeks.

Bitcoin 'Fright & Greed' index (above) and Bitcoin price at Bitstamp (below). Source: btctools.io, TradingView

Notice how between Jan. 29 to Feb. 26, the Bitcoin Fright and Greed indicator remained above 65, indicating that traders were overconfident.

The metric uses trading volume, futures open involvement, social metrics and search data to calculate how hyped the market is.

Thus, it took iv weeks earlier a pregnant Bitcoin price correction took identify after the alarm sign popped upwards. Whoever sold in the initial days after the indicator flashes missed the lxx% rally that followed.

A similar pattern happened between July 23 and Aug. 25, while the Bitcoin price continued to rally. Yes, a correction will always come at some point, but how many weeks or months subsequently?

Bollinger Bands, a expert brusque-term indicator

John Bollinger is an experienced and well-respected trader, but his indicator is the moving average plus some difference based on the current volatility. In short, a 30% weekly move volition be outside this range most of the fourth dimension, considering Bitcoin's usual 4.5% daily volatility.

Bitcoin toll at Coinbase using 20-twenty-four hours Bolling Bands. Source: TradingView

Certainly, a small correction tends to follow through when Bitcoin breaks the upper Bollinger ring, simply that has absolutely zero correlation to the price some two to four weeks alee.

The funding rate has been neutral

Lastly, i should clarify the funding charge per unit, a fee charged by derivatives' exchanges to remainder the take a chance between longs (buyers) and shorts (sellers) as their leverage varies. Sure enough, when a buying spree takes place, the indicator goes up.

Bitcoin 8-hour perpetual futures funding charge per unit. Source: Bybt.com

The current 0.04% boilerplate rate per eight-hour, or 0.viii% per week, is zippo out of the ordinary. Back in December 2022, for instance, it stayed above 1.5% per week for a whole month, and and so again in February 2022.

Similar to the Fright and Greed indicator, this metric shows that buyers are getting overconfident as it surpasses 0.10% per eight-60 minutes, but non necessarily an alarming level.

As long equally buyers are confident that the rally will continue, paying a ane.5% or even iii% weekly fee won't force them to close the leverage longs. For instance, if a Bitcoin supply shortage on exchanges has caused the contempo rally to $56,000 as holders accrue, there might be room to $eighty,000 or higher.

However, a crash can be expected if some bearish events occur in the about future, such as exchange-traded fund requests being denied or some callous United States ban on stablecoins. In such an event, Bitcoin volition not breach the all-fourth dimension high, and those backward-looking metrics will finally "work."

The views and opinions expressed here are solely those of the writer and practise non necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You lot should conduct your own research when making a decision.