Bitcoin (BTC) has rebounded from its recent flash crash, reclaiming the $100,000 level and setting its sights on a potential rally toward $115,000. The recovery, fueled by improved market metrics and reduced leverage, signals bullish momentum despite the volatility.
Bitcoin Recovers After 15% Flash Crash
On December 5, Bitcoin’s price briefly plummeted to $90,500 during a sharp flash crash, marking a 14% decline from its all-time high of $104,600. The drop caused liquidations exceeding $400 million, making it the largest liquidation event since 2021.
Despite the crash, BTC quickly rebounded, gaining 4.57% within a day and climbing above all major exponential moving averages (EMAs) on the four-hour chart. Bitcoin’s ability to recover from this event highlights its resilience in volatile market conditions.
Funding Rates Reset, Hinting at Market Strength
The liquidation event had a silver lining: Bitcoin’s funding rates reset, signaling a healthier, less-leveraged futures market. The open interest-weighted funding rate dropped significantly, from 0.09% on December 4 to just 0.01% by December 6.
A well-known Bitcoin futures analyst, Byzantine General, noted the market’s deleveraging as a positive development. The analyst highlighted key indicators such as reduced aggregated open interest and spot premiums. This reduced leverage sets the stage for further bullish momentum, with Byzantine General remarking, “If BTC just continues pumping after that liquidation cascade, that would be insane.”
Historical Patterns and the “Spinning Top” Candle
Bitcoin’s one-day chart formed a “spinning top” candlestick pattern following the December 5 crash, signaling short-term indecision in the market. However, similar patterns have appeared at key milestones in Bitcoin’s history, such as when it broke past $1,000 and $10,000.
Charles Edwards, founder of Capriole Fund, emphasized that such volatility is “normal” for Bitcoin. Historical analysis shows that these bearish patterns often precede bullish market movements. For instance, Bitcoin continued to climb after surpassing $10,000 in 2017, despite similar volatility.
BTC Targets $115K Based on Fibonacci Extensions
Based on Fibonacci retracement levels, Bitcoin’s next immediate target is $115,000, representing a 15% gain from its current $100,000 support level. Additionally, the Relative Strength Index (RSI) remains below the overbought zone, leaving room for further upside. An aggressive breakout could push BTC as high as $124,500, a level derived from the Fibonacci extension based on the swing low of $90,500.
The flash crash may have shaken traders, but Bitcoin’s rapid recovery and strong technical indicators point to continued bullish momentum. If historical patterns hold, BTC could continue its upward trajectory, further cementing its position in the six-figure price range.
