Bitcoin Price All Over and the Leverage Flush That Caused It

• Bitcoin briefly surged above $90,000 before falling back to $86,000.
• Rising funding rates show an increase in leveraged long positions.
• Analysts are watching $83,000 and $80,000 as key liquidity levels.

Bitcoin failed to hold above $90,000 yesterday, retreating after a brief surge past that level. Analysts attributed the reversal to rising leverage and liquidity-driven trading.

Specifically, the rapid reversal saw Bitcoin climb to $90,087 on Coinbase before dropping to around $86,580 within hours. The inability to maintain levels above $88,000 has reinforced concerns that the market is still churning through a heavy overhang of leveraged long positions.

BTC Price Action Today

The move was sharp and punishing. After piercing the $90k ceiling, Bitcoin reversed course within hours, currently trading near $86,401. 

This 4.5% weekly decline reinforces the view that the market lacks the organic spot demand needed to break out, relying instead on fragile derivatives leverage.

Bitcoin Must Decisively Reclaim $88K

Market analyst Michael van de Poppe said the recent move wasn’t a clear breakout. Bitcoin briefly triggered buy orders on both sides of the range but failed to hold above a key level.

He added that the overall outlook hasn’t changed. If Bitcoin can’t regain $88,000, traders will focus on lower levels. Van de Poppe pointed to $83,000 as a likely support zone, with $80,000 as a deeper level tied to past market lows. These areas often draw buying interest as traders adjust their positions.

Related: Bitcoin Must Break $88K or Risk Drop Toward $80K, Analysts Warn

Funding Rates Signal Rising Leverage

Data from Santiment added further insight into the failed breakout. The analytics firm reported rising positive funding rates for Bitcoin across major exchanges. 

Funding rates reflect the balance between long and short positions in the derivatives market. Positive rates indicate that traders holding long positions are paying a premium, signaling increased bullish leverage.

Santiment said similar funding conditions in recent weeks preceded major volatility. When leverage builds quickly, even modest price declines can trigger forced liquidations. These liquidations can accelerate losses and increase intraday volatility, as seen during Bitcoin’s rapid reversal from above $90,000.

Ethereum Price Now Depends on Bitcoin’s Next Move

Ethereum’s derivatives market showed a contrasting setup during the same period. Santiment data indicated that short positions currently outweigh longs on Ethereum. This suggests weaker bullish positioning and a more cautious stance among traders than among Bitcoin traders.

Despite this difference, Santiment noted that Ethereum and other digital assets remain closely tied to Bitcoin’s movements. Even with lower leverage risk, Ethereum is unlikely to stage a sustained move without stability in Bitcoin’s price.

Volatility Driven by Market Structure

Broader market conditions also played a role in the day’s price swings. Van de Poppe noted that the year-end expiration of the VIX volatility index often causes big moves in risk assets. These moves are usually driven by derivatives trading rather than changes in fundamentals.

Related: Why Bitcoin Stays Volatile After the Latest US Jobs Report

Santiment added that Bitcoin’s funding rates would need to return to neutral or turn negative to support a clearer path toward $100,000.