Although Bitcoin (BTC) rose to $76,000 in recent weeks, it has recently fallen back below $70,000 due to increased uncertainty stemming from the US-Iran conflict.
While the general market expects Bitcoin to remain in a narrow range in the short term, Wintermute analysts suggested that Bitcoin could experience a rise between $70,000 and $74,000.
Sharing its latest analysis from account X, the firm primarily predicted that Bitcoin and the market could enter a period of sudden volatility due to the strengthening of leverage structures based on derivative products.
“The market is currently directionless and in a compressed zone due to accumulated leveraged trading.”
Depending on the next catalyst, Bitcoin is highly likely to experience a sharp move either upwards or downwards.
Analysts also pointed out another important aspect: the influence of the derivatives market has increased sharply recently. Noting that the ratio of Bitcoin futures to spot futures has risen to approximately 15 times, analysts stated that this indicates the recent increases are driven by leveraged positions rather than cash flows.
While this data suggests that Bitcoin and the market could experience strong movement in either direction, Wintermute also outlined both bullish and bearish scenarios that could be expected.
The potential bullish catalysts for Bitcoin were listed as “a significant decrease in geopolitical tensions and a drop in oil prices to $100 per barrel.” If these occur, a short squeeze could happen, and BTC could rise towards the $70,000-$74,000 levels.
Conversely, bearish catalysts that could trigger a decline include “a significant escalation of tensions and oil prices reaching $120 per barrel.” In these scenarios, BTC could fall below $60,000 and, if cyclical trends repeat, could decline as far as $50,000.
*This is not investment advice.