Bitcoin price has struggled to regain its bullish momentum after a sharp decline earlier this month, when it plunged to $49,000.
The largest cryptocurrency by market cap hit a trading price of $58,700 on Wednesday, but concerns about another potential crash, reminiscent of the August 5 plunge, continue to weigh on investors.
Is Bitcoin Price About to Surge 60%?
Against this backdrop, market expert Timothy Peterson has highlighted a compelling indicator that could provide insight into Bitcoin price trajectory over the next three months.
In a recent social media postPeterson highlighted the surprising predictive power of high-yield bonds (HYG) on Bitcoin price movements.
Peterson noted that when Bitcoin is undervalued relative to HYG, it tends to outperform over the next three months. Conversely, when Bitcoin is overvalued relative to high-yield bonds, it could signal imminent price declines.
According to a report According to Cane Island Digital Research, the current indicator suggests a HYG/BTC ratio of 25%. This figure is associated with a potential 60% “lognormal” increase in the price of Bitcoin over the next three months. If the price remains around $60,000, this relationship could reach around $109,000 by November.
Warning of increased volatility ahead
By analyzing the current Bitcoin price movement, market research firm CryptoQuant has identified a significant factor in the current Bitcoin price movement. slow-down:create a resistance level among short-term holders at their equilibrium price.
According to According to CryptoQuant, after the 20% drop earlier this month, short-term holders suffered an average loss of 17%. As the price rebounded back to their average base price, many chose to sell near their breakeven point, reinforcing this resistance level and contributing to the current price stagnation.
In addition, traders’ speculation about possible price increases has contributed to a fragile trading environment. Since August 5, open interest Bitcoin futures jumped 31% from $13.5 billion to $17.9 billion, while funding rates remained positive, indicating a premium over perpetual contracts.
The company warned that this scenario often leads to instability in traders’ positions, making the market more susceptible to sudden movements, such as those seen in the past 24 hours.
Pressure on long positions became evident on Wednesday as Bitcoin long liquidations Shares hit $90 million, the highest level since August 5. The combination of those liquidations and traders halting trading led to a $2.2 billion decline in open positions, further highlighting the market’s volatility.
At the time of writing, the price of Bitcoin stands at $58,900, a drop of more than 4% over a 24-hour period for the largest cryptocurrency.
Featured image of DALL-E, chart from TradingView.com
