Bitcoin’s price experienced a robust jump of nearly 8% on Wednesday, coming tantalizingly close to the $94,000 mark after enduring a prolonged period of downward pressure. At the time of writing, Bitcoin is trading at $91,440, according to data from CoinMarketCap.
This dramatic rally follows what analysts at Bitfinex have termed ‘extreme deleveraging’ within the market. This phase of deleveraging has created conditions ideal for a market stabilization and potential relief bounce.
The current market now operates on a ‘leaner leverage base,’ reducing the likelihood of sudden sell-offs caused by liquidations. This comes on the heels of an alarming market correction on October 10, during which approximately $19 billion was evaporated, leaving many traders to describe the overall market as overleveraged.
Bitcoin’s struggles began after this significant sell-off, which plunged the cryptocurrency down to a low of around $82,000 by November 21. Over the past month, Bitcoin’s value has fallen by 11.72%.
Institutional Interest Makes a Comeback
In recent developments, U.S. spot Bitcoin ETF products have exhibited impressive momentum, recording net inflows for five consecutive days through December 2. On December 2 alone, these funds accumulated an additional $58.5 million.
According to reports, BlackRock’s iShares Bitcoin ETF product led the way with a remarkable $120.1 million in inflows on that day, further propelling Bitcoin’s price recovery.
Institutional interest has clearly revived, with Bank of America advising investors to allocate 4% of their portfolios to digital assets. Additionally, investment giant Vanguard has introduced crypto ETFs for Bitcoin, XRP, Solana, and Ethereum, further solidifying institutional commitment.
Meanwhile, Bitcoin’s trading volume surged nearly 19%, reaching approximately $86 billion during this recent rally, with prices fluctuating between $87,033 and $93,965 within a 24-hour window.
Eyeing Technical Targets
Looking ahead, analyst Ali Martinez has pinpointed $99,000 as the next formidable resistance level for Bitcoin. If this level is successfully breached, projections suggest that the next targets could be as high as $122,000.
Further insights from analyst Gert van Lagen indicate a compelling bullish signal, as the Bollinger Band Width has dropped below 100. This particular indicator has historically signified upcoming parabolic price movements. Past occurrences of this signal have consistently resulted in significant price advancements.
Despite the rally, December’s historical performance for Bitcoin tends to be more subdued, with an average return of just 4.69% since December 2013. However, the current price action seems to defy these seasonal trends.
November, typically viewed as Bitcoin’s strongest month, saw an actual decline of 17.67%. Some analysts, including PlanC, argue that the current cycle is unlike previous ones, further intensifying speculation about Bitcoin’s trajectory.
Tom Lee, chair of BitMine, expresses optimism that Bitcoin can reclaim the critical $100,000 threshold before year-end. According to Bitfinex’s analysis, the current market configuration indicates manageable leverage levels.
As the narrative around Bitcoin evolves, market participants appear increasingly distanced from the four-year cycle theory, which would have predicted the peak around October’s record high of $125,100. Analyst Quinten Francois asserts that Bitcoin is closer to its bottom than its top, reinforcing the belief that significant movements may still be on the horizon.
