According to the latest edition of “Bitfinex Alpha”, even if Bitcoin (BTC) sees a 14% weekly correction after crossing the $100,000 threshold, this does not invalidate the possibility of further upside as key price indicators cool down. report.
The correction wiped out more than $1.1 billion across centralized exchanges, with $815 million associated with long positions, including $419 million directly tied to Bitcoin. This is one of the largest liquidation waterfalls in dollar terms and the second-largest event for a Bitcoin-related trading pair since the FTX collapse in November 2022.
Approximately 4,350 BTC were liquidated per day, the fourth highest daily liquidation amount since 2019. Bitfinex believes that this liquidation cascade is due to profit-taking by long-term holders (LTH), which has resulted in sudden price movements that have reduced distribution rates. get off.
Realized profits (RP), a key indicator that tracks dollar gains from coins moved, hit a daily high of $10.5 billion while Bitcoin surged to $100,000. This figure has since fallen 76% to $2.5 billion per day.
The sharp decline in RP indicates that profit-taking has eased significantly, reducing sell-side pressure and allowing Bitcoin to settle to new all-time highs.
Bitfinex notes that this cooling off period could allow the Bitcoin price to establish a new equilibrium, with less sudden selling expected in the near term.
Stabilization of funding rates
Futures funding interest rates, which soared during the rally period, have also begun to stabilize. On December 5, when Bitcoin reached its most recent price peak, the funding rates for Bitcoin and Ethereum (ETH) temporarily exceeded the annual percentage rate (APR) of 80-100%, leading to significant leveraged long positions. announced.
Smaller altcoins like Dogecoin (DOGE) and Pepe (PEPE) have seen much higher funding rates, exceeding 200% APR.
However, with recent revisions, funding rates have normalized to less than 30% APR for altcoins and less than 15% for Bitcoin and Ethereum. This decline signals a reduction in excessive leverage and suggests that the market is shifting towards greater stability.
Moreover, Bitfinex expects the $100,000 level to no longer be a significant support or resistance level as the market finds a new balance.
The report highlights that further declines in funding rates will mean continued liquidation of leveraged positions, paving the way for more balanced markets. Conversely, a reacceleration in funding rates could indicate a resurgence of speculative demand, potentially rekindling upward momentum.
As sell-side pressure eases and speculative demand stabilizes, Bitfinex maintains an optimistic medium-term outlook for Bitcoin. The coming weeks will determine whether Bitcoin’s consolidation above $100,000 can provide a stable base for further growth.