Glassnode Co-founders Predict Short Squeeze Could Boost Bitcoin (BTC) Price
The co-founders of crypto analytics firm Glassnode believe that Bitcoin’s recent upward movement could lead to a larger rally. According to Jan Happel and Yann Allemann, also known as Negentropic on Twitter, the sudden bullishness of Bitcoin could trigger a short squeeze.
In a short squeeze, traders who borrow an asset at a certain price with the intention of selling it for a lower price are forced to buy back the borrowed assets as momentum turns against them. This can result in further price rallies.
Potential Liquidity Gap and Bullish Momentum
Happel and Allemann highlight the importance of liquidity in this situation. They provide two key points: First, Bitcoin surged to $42,200, which provides liquidity for long positions. Second, the price is moving to fill the liquidity gap above $42,000, indicating potential volatility. Approximately $659 million worth of liquidations have already occurred.
They suggest that the current bullish momentum could trigger up to $1 billion in short position liquidations, potentially propelling the market upward.
Descending Wedge Pattern and Bitcoin Price
The Glassnode founders recently mentioned that Bitcoin may be exhibiting a classic descending wedge pattern. This pattern is often used in technical analysis to identify potential bullish reversals in an asset’s price.
A descending wedge pattern is characterized by a series of lower highs and lower lows that form a wedge shape on the chart. As the pattern progresses, the distance between the highs and lows decreases, indicating a weakening selling pressure. When the price breaks out of the upper trend line of the wedge, it is traditionally considered bullish.
At the time of writing, Bitcoin is trading at $43,436, showing a slight increase in the last 24 hours.
Hot Take: Potential Upside for Bitcoin (BTC)
The sudden bullishness in Bitcoin’s price has raised the possibility of a short squeeze and increased liquidity. Glassnode co-founders believe that this could lead to further upward momentum in the market. With potential liquidations of up to $1 billion in short positions, Bitcoin may experience significant price gains. Additionally, technical analysis suggests that Bitcoin’s descending wedge pattern could indicate a bullish reversal. As Bitcoin continues to trade above $42,000 and fill the liquidity gap, investors should closely monitor its price movements for potential opportunities.
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