Bitcoin’s (BTC) 14% weekly correction after surpassing the $100,000 threshold does not invalidate its further upside potential as key price indicators have cooled, according to the latest edition of “Bitfinex Alpha.” report.
The correction wiped out more than $1.1 billion on centralized exchanges, of which $815 million was in long positions, including $419 million directly tied to Bitcoin. This is one of the largest liquidation cascades in dollar terms since the FTX collapse in November 2022 and the second largest event for Bitcoin-related trading pairs.
Around 4,350 BTC were liquidated in a single day, the fourth highest daily figure since 2019. Bitfinex attributes this liquidation cascade to profit-taking by long-term holders (LTH), which led to a deceleration in their rate distribution following the sudden increase in prices. drop.
Realized profit (RP), a key metric for tracking dollar gains from moving coins, peaked at $10.5 billion per day during Bitcoin’s surge to $100,000. This figure has since fallen to $2.5 billion per day, a drop of 76%.
The sharp reduction in RP indicates that profit-taking has eased significantly, thereby reducing selling pressure and allowing Bitcoin to stabilize at its new all-time high.
Bitfinex notes that this period of reflection could allow the price of Bitcoin to establish a new equilibrium, with less abrupt sales expected in the short term.
Stabilize financing rates
Futures funding rates, which surged during the recovery, are also starting to stabilize. On December 5, the day Bitcoin reached its most recent price peak, funding rates on Bitcoin and Ethereum (ETH) momentarily exceeded the annual percentage rate (APR) of 80-100%, signaling a significant level of positions long levered ones.
Smaller altcoins, like Dogecoin (DOGE) and Pepe (PEPE), have seen even higher funding rates, exceeding 200% APR.
However, following the recent correction, funding rates have normalized to less than 30% for altcoins and less than 15% for Bitcoin and Ethereum. This decline signals a reduction in excessive debt and suggests that the market is transitioning toward greater stability.
Additionally, Bitfinex predicts that the $100,000 level will no longer serve as a significant support or resistance level as the market finds a new equilibrium.
The report highlights that a further cut in funding rates would signal the continued unwinding of leveraged positions, paving the way for a more balanced market. Conversely, any reacceleration of financing rates could indicate a resumption of speculative demand, likely to revive the upward dynamic.
As selling 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 foundation for future growth.
