Bitcoin shows strength for further upside as it consolidates on $100k — Bitfinex

Bitcoin’s (BTC) 14% weekly correction after surpassing the $100,000 threshold does not invalidate its potential for further upside as key price metrics cooled down, according to the latest edition of the “Bitfinex Alpha” report.

The correction wiped out over $1.1 billion across centralized exchanges, with $815 million involving long positions, including $419 million directly tied to Bitcoin. That marks one of the largest liquidation cascades in dollar terms since the FTX collapse in November 2022 and the second-largest event for Bitcoin-related trading pairs.

Approximately 4,350 BTC were liquidated in a single day, the fourth-highest daily figure since 2019. Bitfinex attributes this liquidation cascade to profit-taking by long-term holders (LTHs), which led to a deceleration in their distribution rate following the sudden price drop.

Realized Profit (RP), a key metric tracking dollar gains from moved coins, peaked at $10.5 billion daily during Bitcoin’s surge to $100,000. This figure has since dropped to $2.5 billion per day, a 76% decline. 

The sharp reduction in RP indicates that profit-taking has significantly eased, reducing sell-side pressure and enabling Bitcoin to stabilize at its new all-time high.

Bitfinex notes that this cooling-off period could allow Bitcoin’s price to establish a new equilibrium, with less abrupt sell-offs anticipated in the near term.

Stabilizing funding rates

Futures funding rates, which surged during the rally, are also beginning to stabilize. On Dec. 5, the day Bitcoin reached its most recent price peak, funding rates on Bitcoin and Ethereum (ETH) momentarily exceeded 80-100% annual percentage rate (APR), signaling a significant level of leveraged long positions. 

Smaller altcoins, like Dogecoin (DOGE) and Pepe (PEPE), saw even higher funding rates, exceeding 200% APR.

However, following the recent correction, funding rates have normalized to under 30% APR for altcoins and under 15% for Bitcoin and Ethereum. This decline…