Bitcoin Eyes New Highs as Market Sentiment Improves and Liquidity Surges

May 2, 2025 – Cointelegraph Reports

Bitcoin (BTC) could be on the verge of setting a new all-time high within the next 100 days, according to Bitcoin network economist Timothy Peterson. In a recent analysis shared on social platform X, Peterson pointed to decreasing market volatility and increased investor risk appetite as key indicators for a potential bullish breakout.

Peterson linked Bitcoin’s price trajectory to the CBOE Volatility Index (VIX), which measures 30-day market volatility expectations. He noted that the VIX has dropped from 55 to 25 over the past 50 trading days. A reading below 18 typically signals a “risk-on” environment, which tends to benefit higher-risk assets such as Bitcoin. If current market conditions persist, Peterson’s proprietary model—which boasts a 95% historical tracking accuracy—projects a BTC price target of $135,000.

“Bitcoin thrives when uncertainty is low and capital is flowing into risk assets,” Peterson said, emphasizing the importance of sentiment and volatility on Bitcoin’s performance.

Adding to the macroeconomic perspective, Jurrien Timmer, Director of Global Macro at Fidelity Investments, described Bitcoin’s market behavior as a dual personality—likening it to “Dr. Jekyll and Mr. Hyde.” Timmer explained that Bitcoin can act both as a store of value (Dr. Jekyll) and a speculative asset (Mr. Hyde), depending on broader financial conditions.

He highlighted the cryptocurrency’s correlation with the global money supply, particularly M2. “When M2 expands and equities rally, Bitcoin tends to perform strongly,” Timmer noted. “But if M2 rises while stocks correct, Bitcoin’s behavior becomes less predictable—unlike gold, which remains a more consistent hedge.”

Meanwhile, fresh data from on-chain analytics firm CryptoQuant revealed a sharp increase in stablecoin market capitalization, which now stands at a record $220 billion. This spike is seen as a signal of returning liquidity to the broader crypto market, marking a shift away from the previous bearish phase.

Despite Bitcoin’s steady uptrend, short-term market dynamics reveal an increase in bearish positioning. The BTC futures funding rate has turned negative on lower-time frames, reflecting a surge in short interest. Notably, the 4-hour funding rate has reached its most negative level of 2025, indicating that traders are heavily betting against further gains.

This imbalance in positioning sets the stage for a potential short squeeze, which could drive BTC prices rapidly upward. Analysts estimate that over $3 billion is at risk of liquidation from short-side positions, potentially propelling Bitcoin toward the $100,000 mark if a squeeze unfolds.

While optimism is rising, experts continue to caution that Bitcoin’s performance remains highly sensitive to market sentiment and macroeconomic trends. As always, investors are advised to conduct thorough research and consider risks before making investment decisions.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. All investments involve risk, and readers should perform their own due diligence.