Bitcoin (BTC) has made a dramatic recovery, bouncing back above $100,000 after a brief flash crash sent its price tumbling to $90,500 on Dec. 5. Despite the 14% plunge from its record high of $104,600, Bitcoin has rallied 4.57% on the daily chart, maintaining bullish momentum and holding strong above all exponential moving averages (EMAs) on the four-hour chart.
$400 Million Liquidated in an Hour
The flash crash unfolded within a single hour, with Bitcoin’s price fluctuating between $99,105 and $90,500. This sharp drop triggered over $400 million in liquidations, marking the largest liquidation event since 2021. Despite the turbulence, analysts see a silver lining: the market appears to have deleveraged significantly, which could pave the way for more stable growth ahead.
Bitcoin’s open interest-weighted funding rate—a key metric reflecting market leverage—reset from 0.09% on Dec. 4 to 0.01% on Dec. 6. According to the anonymous futures analyst Byzantine General, this reset, coupled with decreased open interest at the $95,000 level and a dip in spot market premiums, indicates a healthier and less leveraged futures market.
Gm.$BTC somehow looks… really good.
— Byzantine General (@ByzGeneral) December 6, 2024
If BTC just continues pumping after that liq cascade that would be insane and then there's truly nothing that can stop this train. pic.twitter.com/yRepAypaDQ
“This is normal for Bitcoin,” the analyst noted, referencing the cryptocurrency’s history of sharp corrections following major milestones.
Historical Patterns Indicate Further Growth
The price volatility also gave rise to a bearish spinning top candlestick pattern on Bitcoin’s one-day chart. This pattern, often signaling indecision between buyers and sellers, has historically accompanied Bitcoin’s pivotal moments.
Charles Edwards, founder of Capriole Fund, highlighted similarities between the current market dynamics and past milestones, such as Bitcoin’s crossing of $1,000 in 2013 and $10,000 in 2017. In both instances, the bearish spinning top was followed by a continuation of upward momentum.
“Volatility at these levels is nothing new for Bitcoin,” Edwards remarked.
$115K in Sight
Technical analysis supports a bullish outlook, with Fibonacci extensions pointing to an immediate target of $115,000, representing a 15% increase from the current $100,000 level. Moreover, Bitcoin’s Relative Strength Index (RSI) is just below the overbought region, suggesting the potential for an aggressive breakout. Analysts speculate this could push the price as high as $124,500, based on Fibonacci extensions from the swing low of $90,500.
While short-term corrections are inevitable, Bitcoin’s recovery and strong market fundamentals signal that the world’s leading cryptocurrency remains firmly on an upward trajectory. With historical patterns aligning with current trends, Bitcoin appears poised to surpass its latest milestones and redefine the narrative for its long-term potential.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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