Bitcoin’s Market Correction Before Breakthrough to New Highs
Bitcoin (BTC) recently experienced a price correction after reaching a new all-time high above $69,000, resulting in the closure of leveraged perpetual futures bets worth $1 billion across digital asset markets.
On Tuesday, the leading cryptocurrency saw a 10% drop to $59,700, prompting the market to clear excess leverage. According to data from CoinGlass, both long and short traders suffered losses totaling more than $1 billion across major centralized exchanges in the past 24 hours. Specifically, 296,908 traders were liquidated, with long liquidations at $817 million and short liquidations at around $234 million.
Crypto exchange Binance led in liquidations with over $401 million, followed by OKX at $367 million and Bybit at around $104 million. Bitcoin-tracked futures saw $309 million in liquidations, while Ethereum-linked futures experienced over $185 million in liquidations.
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Price Corrections Normalize Funding Rates
The recent correction caused funding rates in the crypto perpetual futures market to decrease to less than 20%. This decline from the previously observed triple-digit figures signals a normalization of the overheated perpetual futures market. As a result, a more sustainable upward movement towards new record highs is expected.
Funding rates spiked above 100% earlier in the week as Bitcoin’s bullish momentum attracted investors looking to maximize gains using leveraged products. Exchanges use the funding rate mechanism to ensure that perpetual prices align with spot prices. A positive funding rate indicates that perpetuals are trading at a premium to the spot price, signaling increased demand for bullish bets. High funding rates, as seen earlier this week, are often associated with over-optimism and interim market tops.
Analysts Predict Bitcoin’s Momentum
Bitwise Chief Investment Officer Matt Hougan foresees Bitcoin surpassing $80,000 this year, driven by the success of spot ETFs. In a recent interview, Hougan emphasized the strong demand for ETFs, which has exceeded expectations. He believes that this interest from traditional finance will attract further institutional investment and boost prices.
Billionaire investor Mark Cuban has also invested in Bitcoin, citing its strength as a store of value. Cuban highlights the scarcity of Bitcoin, with only 21 million ever to exist, and predicts that increasing demand will drive prices up. He views Bitcoin as a great store of value, expecting demand to outstrip supply and result in price appreciation.
