🚨🚨$BTC
🔹Bitcoin is crashing, but options markets are calling for $111K BTC price by February
▪️$2.9 billion in Bitcoin liquidations happened in December, but the flush out is preparing BTC for new highs.
▪️ Bitcoin
tickers down
$97,604
price experienced two episodes of $1 billion or higher futures market liquidations since Dec. 5, albeit its price began and ended the period near $97,000. The latest event moved Bitcoin from $101,430 on Dec. 8 to $94,200 on Dec. 9, a crash that wiped out $2.9 billion in leveraged positions.
Despite the short-term negative impact on sentiment, the Bitcoin derivatives market is presently in a much healthier state, which is precisely what’s needed for a surprise rally to a new all-time high. Traders are less likely to buy during signs of overheated markets, such as an excessive perpetual contract funding rate.
▪️ The aggregate Bitcoin futures open interest declined 8% between Nov. 25 and Dec. 10, from BTC 663,700 to the present BTC 609,400. But, given the impressive $7,160 Bitcoin 24-hour price decline on Dec. 9, the demand for leverage was relatively unaffected.
▪️ The funding rate peaked at 9% per month on Dec. 5 but basically went flat since the price crash to $94,200 on Dec. 9, washing out the excess retail leverage that typically fuels cascading liquidations.
The drastic Bitcoin price volatility frightens new entrants and reduces the investment appeal. However, the reduced leverage provides more confidence to holders that the recent appreciation derives from accumulation, especially from institutional investors.
