Bitcoin Price Forecast: Analyst Anticipates $100,000 Within 3 Months, Based on Crucial Metric
The price of Bitcoin has been facing challenges in regaining its bullish momentum following a significant drop earlier this month to $49,000. Despite reaching a trading price of $58,700 on Wednesday, concerns about a potential crash similar to the one on August 5 are still prevalent among investors.
Market expert Timothy Peterson has drawn attention to an intriguing indicator that could offer insights into Bitcoin’s price trajectory over the next three months. In a recent social media post, Peterson highlighted the predictive power of high-yield bonds (HYG) on Bitcoin’s price movements. He noted that when Bitcoin is undervalued compared to HYG, it tends to outperform in the subsequent three months. Conversely, an overvalued Bitcoin relative to high-yield bonds might indicate impending price declines.
A report from Cane Island Digital Research indicates that 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.
However, market research firm CryptoQuant has identified a key factor contributing to the current downturn in Bitcoin’s price action. Following a 20% drop earlier in the month, short-term holders found themselves at an average loss of 17%. As the price rebounded towards their break-even points, many opted to sell, reinforcing a resistance level and contributing to the current price stagnation.
Speculation among traders regarding potential price increases has created a fragile trading environment. Since August 5, open interest in Bitcoin futures has surged from $13.5 billion to $17.9 billion, a 31% increase, while funding rates have remained positive, indicating a premium on perpetual contracts. This situation often leads to instability in traders’ positions, making the market more susceptible to sudden moves, as seen in the past 24 hours.
The pressure on long positions became evident as Bitcoin long liquidations hit $90 million on Wednesday, marking the highest levels since August 5. These liquidations, combined with traders being stopped out, resulted in a $2.2 billion drop in open interest, underscoring the market’s volatility.
As of the current writing, the Bitcoin price stands at $58,900, reflecting a drop of over 4% in the 24-hour period for the largest cryptocurrency.
Image source: DALL-E, chart from TradingView.com
