Bitcoin Price Poised For 60% Gain?

The Bitcoin price had struggled to regain its bullish momentum after a sharp decline earlier this month, when it plunged to $49,000.

Bitcoin price had a hard time regaining bullish momentum after a sharp decline earlier this month, which saw it drop to $49,000.

The biggest cryptocurrency by market cap reached trading prices of $58,700 on Wednesday, but concerns about another potential crash, like the drop on August 5, continue to hang over investors.

Bitcoin Price Set For 60% Gain?

Amid this backdrop, market expert Timothy Peterson has highlighted an interesting indicator that could offer some insight into the Bitcoin price trajectory over the next three months.

In a recent social media post, highlighted by Peterson, the surprising predictive power of high-yield bonds (HYG) on Bitcoin’s price movements.

When Bitcoin is undervalued relative to the HYG, it tends to strongly outpeform over the next three months, and vice versa, Peterson noted.

According to an analysis by Cane Island Digital Research, the indicator currently suggests a HYG/BTC ratio of 25%, which is linked to a potential “lognormal” increase of 60% in Bitcoin’s price over the next three months. This could take the price to around $109,000 by November, assuming it remains around the $60,000 level.

Rising Volatility At Key Resistance Level

Analyzing the current Bitcoin price action, market intelligence firm CryptoQuant pinpointed a key factor contributing to the present downturn: resistance among short-term holders at their breakeven price.

Following the 20% drop earlier in the month, short-term holders were at an average loss of 17%, according to CryptoQuant. As the price rebounded towards their average cost basis, many chose to sell around their breakeven points, reinforcing this resistance level and contributing to the present price stagnation.

Moreover, traders’ optimism about potential price increases has created a delicate trading environment. Open interest in Bitcoin futures has increased by 31% since August 5, rising from $13.5 billion to $17.9 billion, while funding rates remained positive, indicating a premium on perpetual contracts.

This scenario often leads to instability in traders’ long positions, making the market more susceptible to sudden moves, like the one experienced in the last 24 hours, the firm noted.

Bitcoin long liquidations reached $90 million on Wednesday, the highest levels since August 5, as a result of this pressure. The combination of these liquidations and traders being stopped out led to a $2.2 billion drop in open interest, further highlighting the market’s volatility.

At the time of writing, the Bitcoin price is down over 4% on the 24-hour timeframe at $58,900 for the largest cryptocurrency.

The total crypto market cap stands at $2.4 trillion, also down 1% over the last day.

Featured image from DALL-E, chart from TradingView.com

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