Bitcoin has rebounded from this week's flash crash, resetting key price indicators and paving the way for BTC to chase the $115,000 level.
The price of Bitcoin (BTC) quickly rebounded to over $100,000 after the flash crash on December 5, falling to $90,500.
Despite Bitcoin's 14% drop from its historical high of $104,600, it has increased by 4.57% on the daily chart, maintaining a bullish position above each EMA level on the 4-hour chart.
Bitcoin funding rates reset after $400 million in liquidations.
Bitcoin rapidly fell in one hour, with candle highs and lows of $99,105 and $90,500 respectively. During this brief period, Bitcoin liquidations exceeded $400 million, marking the largest liquidation event since 2021.
However, the main positive takeaway from the liquidation event is that BTC's funding rates are resetting. The weighted funding rate for BTC's open contracts has dropped from 0.09% on December 4 to 0.01% on December 6.
Bitcoin futures analyst Byzantine General stated that the funding rates have reset, and Bitcoin looks "really good."
This anonymous trader emphasized the sharp decline in funding rates, with total open interest dropping to $95,000 levels and a decrease in total spot premiums. All these factors suggest that the futures market is relatively low-leveraged compared to a few days ago. The analyst added that
"If BTC just continues to pump after that liq cascade, that would be crazy, and there really is nothing to stop this train."
Bitcoin's "this is normal"
After the price fluctuations on December 5, Bitcoin's 1-day chart depicted the formation of a bearish spinning top candlestick pattern. The spinning top indicates that the asset is in a period of indecision, as both buyers and sellers push the price in opposite directions.
Coincidentally, this pattern has been observed in significant milestones for Bitcoin before. Charles Edwards, the founder of Capriole Fund, emphasized that Bitcoin also exhibited similar behavior when breaking through $1,000 and $10,000, stating that this is "normal" for BTC.
As shown, a similar bearish spinning top candle pattern was observed when BTC broke through $10,000 in December 2017, followed by severe price fluctuations after surpassing $1,000.
In both cases, the bearish fluctuations were short-lived, and after reaching these milestone targets, prices continued to rise. Therefore, a similar bullish market trend is expected to replay this time.
According to Fibonacci extension, Bitcoin's recent target remains at $115,000, which is a further 15% increase from the $100,000 level. With the Relative Strength Index (RSI) hovering just below the overbought region, an aggressive breakout could push the price up to $124,500, which is $90,500 above the Fibonacci extension swing low.
