Bitcoin Funding Rates Normalize... Has the Bubble Finally Burst?

▲ Bitcoin (BTC)

The Bitcoin (BTC) market has undergone a deleveraging process, shaking out excessive leveraged positions, removing froth from the market, and laying the groundwork for a healthy upward trend.

According to crypto-focused outlet NewsBTC on February 22 (local time), a large portion of open interest in the futures market was liquidated during Bitcoin’s recent price correction, bringing funding rates—previously signaling an overheated market—back to normal levels. Data from blockchain analytics firm Santiment shows that aggressive leveraged long positions were heavily cleared out, indicating a positive signal that speculative demand has been curbed. Although this market reset was accompanied by short-term price declines, it has served as a catalyst for forming a more solid long-term bottom.

Investors are paying close attention to the restored health of the market following this deleveraging process. As leverage ratios on futures exchanges dropped sharply, the risk of sudden crashes caused by unexpected forced liquidations has significantly decreased. Experts assess that the liquidation of leveraged positions is a necessary cleansing process for Bitcoin to firmly establish itself as a true store of value. Notably, during this correction period, the prevailing analysis suggests that orderly position unwinding occurred rather than panic selling by retail investors.

On-chain data indicates that long-term holders have instead taken advantage of the recent price correction as an accumulation opportunity. While the amount of Bitcoin flowing into exchanges has declined, whale wallet addresses have steadily increased their holdings. This trend suggests that despite short-term market volatility, confidence in Bitcoin’s long-term value appreciation remains strong. Capital flows from institutional investors have also shown gradual recovery beyond temporary contraction, supporting the market’s underlying strength.

Bitcoin is currently defending the key support level of $67,000 while exploring a new direction. Reduced volatility following the deleveraging process has provided psychological stability for market participants and is contributing to steady buying pressure. Market observers diagnose that the current environment—cleared of excessive speculation—offers optimal conditions for Bitcoin to rebound toward its previous all-time high. With unnecessary froth removed, the digital asset market is now focusing on qualitative growth driven by macroeconomic indicators and genuine demand.

The Bitcoin ecosystem is leveraging this market reset as a stepping stone to move away from a speculation-driven structure and enhance its credibility as an institutional-grade asset. As leveraged liquidations near completion, downside risks are being kept at limited levels, which could act as a strong driving force in the event of a future price increase. Global investors are closely monitoring stabilized funding rates and open interest trends as they carefully assess the next trajectory of the digital asset market.

Disclaimer: This article is for investment reference purposes only and we are not responsible for any investment losses resulting from it. The information provided should be interpreted for informational purposes only.