Bitrabo Editorial
After a recent sharp decline to $49,000, Bitcoin has been struggling to regain its bullish momentum, with the price reaching $58,700 on Wednesday. However, concerns about a potential crash similar to the one on August 5 remain present among investors.
Potential 60% Gain for Bitcoin Price
In light of the current situation, market analyst Timothy Peterson has pointed out an interesting indicator that could offer insights into Bitcoin’s price movement in the coming three months. Peterson highlighted the correlation between high-yield bonds (HYG) and Bitcoin’s price fluctuations.
Peterson explained that when Bitcoin is undervalued relative to HYG, it tends to perform well in the following three months. Conversely, if Bitcoin is considered overvalued compared to high-yield bonds, it might indicate a looming price decline.
According to a report by Cane Island Digital Research, the current HYG/BTC ratio stands at 25%, suggesting a potential 60% increase in Bitcoin’s price over the next three months. If the price hovers around $60,000, this relationship could see Bitcoin reaching approximately $109,000 by November.
Warning of Increased Volatility
An analysis by market research firm CryptoQuant revealed a significant factor contributing to the current Bitcoin price downturn: the establishment of a resistance level among short-term holders at their break-even price.
Following a 20% drop earlier this month, short-term holders faced an average loss of 17%. As the price approached their break-even points, many decided to sell, reinforcing the resistance level and adding to the current price stagnation.
Moreover, heightened speculation about potential price surges has created a delicate trading atmosphere. Since August 5, open interest in Bitcoin futures increased by 31% to $17.9 billion, with positive funding rates indicating a premium on perpetual contracts.
This environment often leads to instability in traders’ positions, making the market more susceptible to sudden fluctuations, as seen in the last 24 hours.
On Wednesday, Bitcoin long liquidations amounted to $90 million, the highest level since August 5. These liquidations, along with traders being stopped out, caused a $2.2 billion decline in open interest, underscoring the market’s volatility.
Currently, the Bitcoin price sits at $58,900, reflecting a decrease of over 4% within a 24-hour period for the leading cryptocurrency.
Image source: DALL-E, chart data from TradingView.com