Bitcoin’s Potential for Upside Despite Recent Correction
Bitcoin’s recent 14% weekly correction after surpassing the $100,000 threshold does not diminish its potential for further upside, according to the latest “Bitfinex Alpha” report.
Key Points from the Report:
- Over $1.1 billion wiped out across centralized exchanges
- $815 million lost in long positions
- Approximately 4,350 BTC liquidated in a single day
- Realized Profit (RP) dropped by 76%
Impact of Profit-Taking and Stabilization:
The liquidation cascade was attributed to profit-taking by long-term holders, leading to a deceleration in their distribution rate following the sudden price drop. Realized Profit (RP) peaked at $10.5 billion daily during the surge to $100,000 but has since dropped significantly, indicating reduced sell-side pressure and enabling Bitcoin to stabilize at its new all-time high.
Stabilizing Funding Rates
Futures funding rates, which surged during the rally, are now beginning to stabilize. Funding rates on Bitcoin and Ethereum exceeded 80-100% APR at the recent price peak but have now normalized to under 15%. This decline suggests a reduction in excessive leverage and a transition towards greater market stability.
Market Transition and Outlook:
Bitfinex anticipates that the $100,000 level will no longer be a significant support or resistance level as the market finds a new equilibrium. A further decline in funding rates could signal continued unwinding of leveraged positions, while any re-acceleration could indicate renewed speculative demand. Despite recent volatility, Bitfinex maintains an optimistic mid-term outlook for Bitcoin, with the coming weeks crucial in determining its stability above $100,000.
