Key Points
- Bitcoin’s price has experienced volatility, with potential for a significant correction to $45,000.
- The Bitcoin funding rate has turned negative, indicating a bearish market sentiment in the short term.
Following the publication of the US CPI inflation data, the price of Bitcoin (BTC) has faced selling pressure, resulting in a fall below the $57,000 mark.
However, it has since recovered to around $58,000.
Market Liquidations and Potential Corrections
The price fluctuations have led to significant market liquidations, with BTC long and short liquidations reaching $76.06 million.
On a four-hour timeframe, Material Indicators have identified a death cross pattern on the Bitcoin chart, which could help establish long-term support.
However, some market analysts suggest that there’s potential for a significant correction from the current levels, possibly falling to $45,000 before resuming an upward trend.
Bitcoin Funding Rate Warning
An important on-chain indicator to monitor is the Bitcoin funding rate, which has been negative for three days straight, a situation not seen since October 2023.
CryptoQuant has noted that the average Bitcoin funding rate indicator, which counts the funding rates on all exchanges, is also negative.
This indicates that short positions are currently dominating the perpetual market.
Considering Binance has the largest share of open interest (OI), this could suggest a bearish market sentiment in the short term.
Liquidation platform Coinglass reported that the open interest (OI) for Bitcoin futures has reached $29 billion as of August 16, and has been rising throughout the week.
In contrast, the spot BTC price has dropped 5% over the last two days.
Open Interest refers to the total number of Bitcoin futures that have yet to settle or expire.
The increasing Open Interest suggests significant leverage in the market, which could amplify movements in either direction.
