Key Points
- Analysts predict Bitcoin’s recovery could extend to $70K due to low-risk levels and increased network activity.
- However, over-leverage could pose a potential risk to Bitcoin’s price.
The founders of Glassnode, Jan Happel and Yann Allemann, have suggested that Bitcoin is well-positioned to retest the $70K mark. They warned that those planning to short Bitcoin at $68K or $69K could face significant liquidations.
The pair, known as Negentropic, identified a compression channel within the megaphone pattern as Bitcoin continues to consolidate after reaching new highs in March.
Bitcoin’s Potential Rally
The Glassnode founders, through their crypto insights platform Swissblock, suggested that Bitcoin could reach $70K due to current low-risk levels and a surge in network activity. They noted that Bitcoin’s rally to $64K changed the asset’s risk profile from high to low.
Historically, recoveries in May, June, and July occurred after Bitcoin displayed a low-risk profile. This trend may repeat, pushing Bitcoin to $70K. Swissblock also pointed to an increase in Bitcoin network growth, confirming the sustainability of the uptrend.
Although network liquidity lags behind growth, there are signs of slow improvement that could boost Bitcoin. Negative funding rates in Bitcoin’s perpetual markets could also speed up the recovery.
Factors Influencing Bitcoin’s Recovery
The low funding rates for Bitcoin have been attributed to the dominance of US spot Bitcoin ETFs, which have a greater impact on price than derivative markets. Swissblock speculated that recent Bitcoin staking on the Babylon staking platform may have contributed to these negative funding rates.
VanEck has also predicted a similar recovery, citing a comparable risk appetite for Bitcoin seen in previous market recoveries. However, a CryptoQuant analyst warned that over-leverage (Open Interest rates) is driving Bitcoin’s price, which could lead to a price reversal, as has happened in the past.
