Bitcoin pulls back from all-time high as analysts caution of a 20% market correction

The head of research at IntoTheBlock, Lucas Outumuro, has issued a warning that the market is displaying signs of being overheated, with leverage increasing in both centralized and decentralized finance sectors.
As Bitcoin’s price experienced a retracement from its peak and dropped below $69,000, analysts at IntoTheBlock are concerned about the market overheating and the potential for a correction.
In a post on March 15th, Outumuro addressed the rising leverage in both decentralized finance (defi) and centralized finance (cefi) markets, indicating that an adjustment is looming.
Outumuro highlights that funding rates on centralized exchanges are at abnormally high levels. Although exchange-traded fund (ETF) flows may continue to support spot prices for now, the excessive bullish positioning in derivatives is a warning sign for the market.
Furthermore, the surge in leverage is not limited to centralized exchanges, as defi platforms are also experiencing a rise. Outumuro notes that the aggregate debt issued through Aave v3 on Ethereum has more than doubled since the beginning of the year.
The analyst warns of a potential “Great Unwinding” in the crypto market, predicting a 20% correction as the amount of leverage in the system is reset. While the exact timing of such a correction remains uncertain, the increasing borrowing costs should serve as a signal for crypto investors to exercise caution in their trading strategies.
As of press time, Bitcoin is trading at $67,819, according to CoinGecko data.