After hitting the $100,000 milestoneBitcoin suffered a sudden price crash on Friday as a result estimated price loss of 7%. During this recession, the perpetual financing levels of the asset in the derivative markets were affected. However, traders can still maintain enough leverage to strongly influence price volatility.
Bitcoin's short-term outlook uncertain due to higher leverage
In the X post on December 6, The blockchain analytics company Glassnode expressed that Bitcoin's perpetual funding rate could have a significant impact on the asset's short-term price.
For context, perpetual financing rates are periodic payments made between traders in the perpetual futures market to ensure that the price of the contract aligns with the spot price of Bitcoin. Positive funding levels indicate that long positions pay short positions, which is bullish while negative funding levels represent the opposite.
According to Glassnode, BTC's permanent funding levels initially showed signs of stability on their weekly frame amid speculative demand. However, with the asset's increase to $100,000 on Thursday driven by an increase in market leverage these funding levels increased 3.6x their weekly average.
In particular, Bitcoin's perpetual funding level hit a peak of 0.062, representing the highest value since April. Importantly, the analytical team at Glassnode notes that this rate spike reflects a significant impact by the derivative market on Bitcoin's ascent above $100,000.
However, Bitcoin's flash price led to a significant decline in its funding levels just above 0.024. Despite this drop, Glassnode says that these levels are still relatively high compared to earlier in the week, indicating that the market still has a significant level of leveraged positions. Bitcoin.
This residual leverage in the market indicates strong potential for increased price volatility. Therefore, the price movement of Bitcoin in the coming days seems to be unclear as there could be reversals in both directions asinsignificant amount of meltingcausing a cascading effect.
STH's cost base goes to a price target of $112,000
In other news, celebrity analyst Ali Martinez is on it posted Bitcoin price prediction based on the asset's short-term holder cost basis (STH) i.e. the average price at which those who usually receive BTC over the past 155 days . It indicates a break-even point for those investors.
According to Martinez, the behavior of STH shows that Bitcoin would reach a local price or $112,926 based on standard deviation + 1 which will adjust the STH cost basis level up to account for price volatility and behavior trends.
At press time, Bitcoin was trading at $100,137 after recovering from Friday's crash facing rejection at $102,000. At the same time, the asset's trading volume is down 42.46% and its value is $89.12 billion.
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