On May 21, CryptoQuant analyst AXEL Adler Jr. posted on social media, "Whenever the price experiences a strong surge, causing a large number of previously loss-making tokens to quickly turn profitable, the 30-day simple moving average (SMA) of the unspent transaction output (UTXO) profit and loss ratio will rise above 200. The higher this indicator soars, the more likely the market is to be approaching an 'overheated' or 'selling pressure release' stage.
Currently, this indicator is at 99, so it has not yet shown signs of market overheating. If this moving average continues to break through 200, it will be a clear signal that market sentiment is entering a new round of frenzy. In other words, the market may still have the potential to continue making new highs, but the 'easy fuel' driving the profit and loss ratio has basically been exhausted. Subsequently, stronger price momentum or dramatic fluctuations will be needed to push this indicator higher again.
As I said yesterday, the third 'compression period' of this cycle is precisely the key driving force that will push this indicator to break through 200 and enter the overheated stage."
