The co-founders of the crypto analytics firm Glassnode think Bitcoin’s (BTC) sudden move to the upside could trigger an even larger rally.
Glassnode co-founders Jan Happel and Yann Allemann, who share the Negentropic handle on the social media platform X, say that Bitcoin’s sudden bullishness could result in a short squeeze.
A short squeeze happens when traders who borrow an asset at a certain price in hopes of selling it for lower to pocket the difference are forced to buy back the assets they borrowed as momentum moves against them, triggering further rallies.
“‘Liquidity is KEY.’
1. Bitcoin Analysis: Bitcoin surged to $42,200, providing liquidity for long positions, with a neutral impulse.
2. Liquidity Gap: The price is moving to fill the liquidity gap above $42,000, indicating potential volatility. Approximately $659 million in liquidations occurred.
Outlook: Bullish momentum could trigger $1 billion in short position liquidations, potentially propelling the market upward.”
The founders recently said that Bitcoin may be printing a classic descending wedge pattern, which is used in technical analysis to identify potential bullish reversals in an asset’s price.
The 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, which indicates that the selling pressure is weakening. When the price breaks out of the upper trend line of the wedge, it’s traditionally considered bullish.
Bitcoin is trading for $43,436 at time of writing, up slightly in the last 24 hours.
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