Bitcoin (BTC) has entered a new phase of the bull cycle, hitting an all-time high (ATH) north of $111,000 on May 22, which was fueled by increased investor confidence, record spot BTC exchange-traded fund (ETF) inflows, and heightened derivatives activity.

However, as on-chain indicators flash signs of euphoric sentiment, analysts are warning that volatility could be around the corner, especially with the $120,000 level emerging as an important psychological and technical threshold.

Rising Activity, Rising Caution

According to the latest weekly market sweep by crypto analytics platform Glassnode, Bitcoin’s strength remains firmly intact. Metrics show rising investor profitability, soaring trade volume through centralized exchanges, and a 51% increase in futures open interest since April’s local low around the $74,000 level.

The euphoric signals are also manifesting in tangible market activity. Glassnode reported a significant uptick in exchange interactions, with approximately 33% of all Bitcoin on-chain volume now flowing through centralized trading venues, something analysts consider to be a clear indicator of rising trading appetite.

Furthermore, the analytics platform noted that while BTC has broken its third ATH this cycle, the rally remains within historical bounds. Its data paints a picture of a market heating up rapidly, with investor profitability surging high enough to push the Relative Unrealized Profit metric above its +2 standard deviation band.

These environments are usually characterized by heightened volatility and tend to be brief in duration, noted analysts, highlighting that only 16% of all trading days see such extreme paper profits.

Their finding is similar to a May 28 report from CryptoQuant, which revealed that 99% of Bitcoin’s Unspent Transaction Outputs (UTXOs) are now in profit. This threshold marked critical market turning points in the past, often coming before either sustained rallies or sharp corrections.

However, the experts at CryptoQuant urged caution, pointing to unresolved macroeconomic uncertainties, particularly around U.S. policy direction under the Trump administration, as a factor that could potentially mute full-blown risk appetite despite the extreme profitability.

Price Action Reflects the Tension

BTC’s recent price trajectory seems to be reflecting this push-and-pull dynamic. After peaking at $111,814 a week ago, the flagship cryptocurrency has experienced expected consolidation, pulling back to trade around $107,728 at the time of this writing.

While the price represents a modest 1.2% dip in the last 24 hours, zooming out reveals the broader momentum. Despite a 3.4% pullback over the past seven days, BTC remains up by a solid 14.1% over the last month, while its year-over-year gains stand at 56.6%.

All eyes are now fixed on the $120,000 threshold, which Glassnode identified as a critical inflection point at which several on-chain price models converge. Judging from the past, if BTC were to breach these levels, it could accelerate sell-side pressure as long-term holders look to pocket gains.

In the event of further upside, the $120k level appears as a key zone of interest, with sell-side pressure expected to accelerate, the platform’s analysts concluded.