As a seasoned crypto investor with over half a decade under my belt, I’ve seen my fair share of Bitcoin’s rollercoaster rides. The recent flash crash and subsequent recovery above $100,000 is a testament to the inherent volatility of this digital asset. However, as Byzantine General rightly pointed out, it looks “really good.
The cost of Bitcoin (BTC) bounced back promptly and surpassed $100,000 once again, following a sudden drop that reached as low as $90,500 on December 5th.
Although Bitcoin dropped by 14% from its peak of $104,600, it has experienced a 4.57% increase in the daily analysis and continues to hold a positive, bullish trend, surpassing every Exponential Moving Average (EMA) level on the 4-hour graph.
Bitcoin funding rate resets after $400 million liquidation
In just an hour, there was a significant drop in Bitcoin’s value, with its highest point at around $99,105 and the lowest at approximately $90,500. This rapid decline triggered over $400 million in Bitcoin liquidations, marking the largest such event since 2021.
Nevertheless, one significant advantage that emerged from the liquidation event was that Bitcoin’s funding rate experienced a refresh. The open interest-weighted funding rate for Bitcoin decreased significantly, falling from 0.09% on December 4th to just 0.01% by December 6th.
The Byzantine General, who specializes in analyzing Bitcoin futures, stated that the funding rate has been adjusted and finds the current state of Bitcoin to be very promising.
The anonymous trader highlighted the sharp decline in the funding rate, decreased aggregated open interest to the $95,000 level, and a drop in the aggregated spot premium. All these factors indicate a relatively deleveraged futures market compared to a few days back. The analyst added,
“If BTC just continues pumping after that liq cascade, that would be insane, and then there’s truly nothing that can stop this train.”
“This is normal” for Bitcoin
Following the price fluctuation on December 5th, the one-day Bitcoin chart showed the emergence of a bearish “wobbly doji” candlestick pattern. This pattern signifies a time of uncertainty regarding the asset, as both buyers and sellers exerted pressure to move the prices in opposite directions.
Interestingly enough, a similar pattern has emerged at significant landmarks in Bitcoin’s history. As pointed out by Charles Edwards, the founder of Capriole Fund, Bitcoin tends to behave in this manner when it surpasses prices like $1,000 and $10,000. He considers this behavior as “normal” for BTC.
In the provided chart, you’ll notice that a comparable “spinning top” candle shape appeared when Bitcoin (BTC) surpassed $10,000 in December 2017. Following this milestone, BTC experienced significant price volatility after it breached $1,000.
Twice before, temporary downturns in the market (bearish volatility) occurred, but once significant goals were reached, the price trend resumed its upward trajectory. Given this pattern, it’s reasonable to anticipate a bullish market repeat in the current scenario too.
According to Fibonacci analysis, Bitcoin‘s next goal is roughly $115,000, representing a 15% increase from its current level of $100,000. If the market experiences a strong surge past the overbought zone as indicated by the Relative Strength Index (RSI), Bitcoin could potentially reach $124,500 – this figure being approximately three times the Fibonacci extensions’ lowest point at $90,500.
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2024-12-06 23:23