Crypto expert Jamie Coutts is predicting a rollercoaster for Bitcoin in the next few months. His new model suggests Bitcoin’s price could either plummet or skyrocket to new all-time highs.
Two Extreme Scenarios
Coutts’s Bitcoin Derivatives Risk Score (DRS) model points to two drastically different possibilities:
- Brutal Drop: A significant price decline.
- New ATH:
A surge to unprecedented highs.
He bases this on comparing recent market behavior to past events. The relatively small pullback after Bitcoin’s recent surge (only about 30%) is unusual. He contrasts this with a similar situation in 2019, which resulted in a much larger drop (50%, or even 70% considering the COVID impact). He believes the 2019 scenario is a better comparison to today’s market than the 2021 boom.
Low Risk, High Uncertainty
Currently, Bitcoin’s DRS is in a “low-risk” zone, which ironically means it’s hard to predict what will happen next. While a sharp decline is possible, a significant rebound is also on the table.
The Liquidity Factor
A major factor influencing Coutts’s prediction is global liquidity. He believes that governments will need to inject more money into the economy to keep things afloat, especially those with massive debt. This influx of cash could significantly boost the derivatives market (which is four times larger than the spot market), potentially sending Bitcoin to new all-time highs.
An Unusually Long Drought
Coutts also highlights the Global Liquidity Index, which has been shrinking for an unprecedented three years. Historically, these periods have been much shorter. He argues that this prolonged contraction can’t last forever and a liquidity injection is inevitable.
In short, Coutts sees a high-stakes gamble for Bitcoin in the coming months, with both a major crash and a massive rally as distinct possibilities. At the time of writing, Bitcoin was trading at $87,703.
