Bitcoin May Hit $70,000 Before the Next Crypto Correction
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| By Juan Villaverde |
Counter to what my favorite liquidity indicator — Japanese M2 (JpM2) — has indicated, Bitcoin (BTC, “B+”) rallied through much of this past week.
But, if you’ve read my latest updates, you’ll know that doesn’t change the medium-term outlook too much.
That’s because both liquidity indicators I watch — JpM2 and Central Bank Liquidity (CBL) — always showed a small rally before a correction kicks off as summer shifts into fall.
The only question was whether that rally would happen right as the July low hit … or of we would have to wait until August.
The market, it seems, has given us its answer.
As such, early August is a time frame worth dwelling on. That’s when I believe we’ll see the near-term top in crypto prices.
Between now and then, I can see this relief rally taking Bitcoin back to the $70,000 level.
Why not any higher?
Because August is also roughly when the 10-year Treasury yields will likely start to fall again. That matters because, lately, we've seen a strong correlation between the 10-year T-bond yield rate and the price of BTC:
BTC and 10-Year T-Bond Yields Tightly Correlated
This is not how these two variables typically behave over the long run. But since Operation Epic Fury, Bitcoin and 10-year yields have moved almost in lockstep.
Of course, the 10-year yield is essentially the inverse of 10-year bond prices. So, another way to put it is this: When bonds rally, Bitcoin tends to sell off, and vice versa.
That makes sense in the short term since a bond rally is often a flight-to-safety trade. And Bitcoin still broadly behaves like a risk asset — more closely correlated with the Nasdaq than safe havens like bonds (or gold).
Why bring this up? Because my Crypto Timing Model is projecting …
An Early August Rally in Bonds
The next two turning points are a low around Aug. 5. Followed by a high around Feb. 13, 2027.
If the negative correlation between T-bonds and crypto holds, as I expect it will near-term, this incipient bond rally will likely coincide with the same Bitcoin sell-off liquidity has been warning about for weeks.
JpM2 Sees a Bitcoin Top July 29 to Aug. 2
To be clear, I'm not saying Bitcoin will mirror bonds all the way through February of next year. This positive correlation will fade eventually.
But it is worth noting that the interest rate outlook does appear to line up with what Bitcoin is expected to do over the next several months. If recent correlations hold, the incoming decline in rates (bond rally) is likely to coincide with Bitcoin selling off alongside it.
Interestingly, February 2027 also shows up prominently on my Bitcoin Forecasting Model. Not as a cycle low, but as the point when Bitcoin is expected to accelerate meaningfully higher.
When two visibly correlated markets show similar turning points, it gets my attention. And that's exactly what's happening here.
So, here’s the takeaway for investors …
Between now and early August, expect BTC to climb back up, likely to around $70,000. Then, we’ll see another correction lasting at least until October.
Here’s the kicker though — I strongly suspect $58,000 will hold as strong support.
Remember, this is the same level that stopped the correction back in February and more recently this summer. Which means the next low that’ll come between late September and October will likely be a solid time to load up for long-term investors.
(To see exactly how my Crypto Timing Model will handle my long-term entrances, click here.)
After October, my outlook gets a bit murky. My liquidity indicators can help see general price trends, but only about three months out. Which means we’ll have to wait a bit longer to get an idea of what’s in store for Q4.
Either way, both my Forecasting Model and T-bonds show that things should heat up more by February of next year.
Investors will likely want to be fully positioned by then.
Best,
Juan Villaverde
