As of Jan. 29, Negentropic, one of the founders of Glassnode, shared some thoughts on the current state of the Bitcoin market.
He stresses how crucial liquidity is for BTC prices and that the current rise above $42,200 has made it possible for people to open long positions, indicative of a neutral impulse.
Negentropic sees the Bitcoin price rising to fill the liquidity gap above $42,000, which suggests that the price could change quickly. Notably, liquidations worth about $659 million have already happened.
Bitcoin’s Potential $1 Billion Short Liquidation
After looking at the situation, he thinks that positive momentum could lead to the liquidation of another $1 billion worth of short positions, which could cause the market to move up.
“Liquidity is KEY.”
1. Bitcoin Analysis: Bitcoin surged to $42.2k, providing liquidity for long positions, with a neutral impulse.
2. Liquidity Gap: The price is moving to fill the liquidity gap above $42k, indicating potential volatility. Approximately $659 million in… pic.twitter.com/wStqXqmLRN
— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Negentropic_) January 29, 2024
If things go well, there could be a “short squeeze,” which happens when the price of an asset goes up and many short buyers have to get out of their positions.
Negentropic’s bullish view fits with a drop in selling pressure in the Grayscale Bitcoin Trust (GBTC) from investors who are cashing out. GBTC withdrawals have slowed down recently, which happened at the same time that China’s central bank put $140 billion into the economy.
The co-founder of Glassnode mentioned in an earlier tweet that a liquidity surge had begun because China wants to keep its markets stable by adding a lot of liquidity. He thinks this could be the spark that drives the cryptocurrency and stock markets into the first half of 2024.
According to the most recent report, Bitcoin hit a high point of $42,839 on January 28. Since then, it has slightly dropped to around $42,000 at press time. The current rise in price is part of a recovery rally that began last week after a drop to $38,500.
Markus Thielen from 10x Research thinks that Bitcoin prices could hit $50,000 by the end of the first quarter. This makes the market even more optimistic.
