(Bloomberg) -- Bitcoin’s surge to what appeared to be a unstoppable run toward a fresh record high cooled, with traders warning that the breakneck pace was unsustainable. 

The recent run has taken prices to “very frothy levels,” Michael Novogratz, founder of Galaxy Digital, said during a Bloomberg Television interview. He expects a “correction” before prices resume climbing. 

The token rose as much as 5.12% to $63,649 on Thursday, before trading little change. The pullback follows a volatile trading session a day earlier. Bitcoin spiked to as high as $63,968 on Wednesday, before paring much of those gains in a crash back to below $59,000 — a move that buffeted crypto providers like Coinbase Global Inc., which suffered outages as traffic surged.

Buying has largely been spurred on by massive net inflows into US Bitcoin exchange-traded funds, which topped $7 billion this week. The token’s momentum has triggered comparisons to the environment last seen during Bitcoin’s all-time record high of nearly $69,000 in November 2021, and whether this rally represents the start of a new bull market for cryptoassets.

A persistent concern has been a lack of supply of Bitcoin available for purchase in the open market, with more than half of all Bitcoin tokens in circulation having not moved in more than two years, per Glassnode data. Some like Stephane Ouellette, chief executive of digital-asset platform FRNT Financial, said such fears could be overblown, with short-term holders already starting to offload positions.

“We have a long way to go between now and when we get to a full bull market, but it does seem like this concern that the market will break due to a liquidity crisis is not necessarily the case,” Ouellette said. 

To be sure, there’s still time for a pause in momentum. The unrealized profit margin of short-term Bitcoin holders — meaning those who are likely frequent traders of the asset, rather than long-term investors — is at extreme levels after the recent rally, according to data from CryptoQuant. 

Margins are currently sat around 45%, the research firm said in a message on Thursday, with any ranking above 40% signaling that a potential price correction is on the way.

Meanwhile, Bitcoin’s recent rally has made it extremely expensive to open new long positions in the token’s perpetual futures market — another sign that a slowdown could be en route. The funding rate for Bitcoin perpetual futures is at its highest level since April 2021, according to CryptoQuant. “Historically, when the cost of opening new long positions becomes too high, Bitcoin prices tend to pause or experience a correction,” the research firm said.

--With assistance from Sonali Basak.

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