A notable perspective recently came from Glassnode co-founders Jan Happel and Yann Allemann, Negentropic on X, who recently shared insights in Bitcoin price dynamics. Notably, the analysts emphasized that liquidity is a crucial factor for Bitcoin’s price trajectory.
Bitcoin market on the verge of a spike in volatility
Negentropic revealed that BTC’s recent surge above $42,200 has created a significant liquidity pool for long positions, characterized by a “neutral momentum” in the market.
This trend indicates that Bitcoin is aiming to close the liquidity gap above $42,000, indicating potential volatility and significant market changes.
Approximately $659 million in liquidations have occurred to date, leading Negentropic to predict that continued bullish momentum could lead to liquidations worth $1 billion in short positions.
“Liquidity is critical.”
1. Bitcoin Analysis: Bitcoin rose to $42.2k, providing liquidity for long positions, with neutral momentum.
2. Liquidity Gap: The price moves to fill the liquidity gap above $42,000, indicating potential volatility. Approximately $659 million in… pic.twitter.com/wStqXqmLRN
— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Negentropic_) January 29, 2024
This scenario could catalyze a market rise via a “short squeeze,” a rapid price increase that forces short sellers to exit their positions. Such market movements often result in dramatic shifts, providing fertile ground for Bitcoin growth.
Meanwhile, in a after Uploaded last week, Negentropic linked the growing liquidity in the crypto market to China’s efforts to stabilize its markets by injecting substantial liquidity. According to the co-founder of Glassnode, this development could serve as a crucial catalyst for cryptocurrencies like Bitcoin and the stock markets as we move into the first half of 2024.
The liquidity wave begins.
China will try to support its markets through massive liquidity. It will be the catalyst that will send the crypto and stock markets soaring in the first part of 2024 🚀🚀@HenrikZeberg https://t.co/LBXBRh6D35
— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Negentropic_) January 23, 2024
This perspective is consistent with the broader market recovery, as Bitcoin shows signs of revival following reduced selling pressure, particularly from the Grayscale Bitcoin Trust (GBTC).
Bitcoin is trading at $43,166, up 6% in the past week. However, despite this rebound, the daily trading volume of these assets remains subdued, from $26 billion last Monday to $14 billion today, indicating cautious market sentiment.
BTC bullish signals are getting stronger
Amid these market developments, bullish forecasts continue to emerge. Crypto analyst Jelle recently suggested that now that Bitcoin has reclaimed the $42,000 level, it “could be time to focus on longs again.”
#Bitcoin made great progress this past weekend, recovering $42,000 and returning it to the range.
Time to refocus on longs. The bull market continues! pic.twitter.com/T7fgmsVIGs
— Jelle (@CryptoJelleNL) January 29, 2024
Echoing this sentiment, Michael van de Poppe, a leading crypto analyst and expert, expressed optimism in his latest YouTube video. He argued that the recent price correction in Bitcoin may have reached its end.
Ali’s chart analysis further supports the bullish sentiment and reveals an increase in the number of large Bitcoin holders. Another 46 entities now own 1,000 BTC or more, an increase of 3% in just two weeks.
Even in the midst of this market correction #Bitcoin whales don’t slow down; they accumulate more $BTC!
There has even been a notable increase in the number of major players: 46 new entities now own 1,000 #BTC or more, which means an increase of 3% in just two weeks. pic.twitter.com/GVNInKW7A2
— Ali (@ali_charts) January 24, 2024
Featured image from Unsplash, chart from TradingView
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