In hindsight, I overshot. But not by much. I considered their retraction to be in poor taste and poor faith. All it would have taken is a counter-offer to realign the discussion.

Yeah, I think you probably dodged a bullet. If people come to me with a ridiculous counter, all it tells me is they don't know what the market is like, and I'd have a conversation about that, and make another offer. If people come to me with a high counter but one that might be plausible, I'd ask them to justify it, explain why we can't/won't go that high, and counter.

If someone takes it as some perceived slight that you've asked for a higher amount, then consider they'd probably be equally offended if you asked for a raise down the road, and then you'd be in a bad spot...

Of course being able to not worry about being turned down is a luxury we can't always afford.

(Also, I have at times thought I massively overshot, and kicked myself because they immediately accepted; you'd be surprised how much of an increase you can ask for sometimes)