Glassnode co-founder names the factor that will cause a $ 1 billion bitcoin liquidation

The co-founder of Glassnode, known on the X platform as Negentropic, shared his thoughts on the future of bitcoin in a new tweet. The analyst emphasized that liquidity remains a key factor for the price of BTC $62,623.18 Bitcoin 0.73% Market capitalization $1.24 trillion VOL. 24 hours $0.46 billion .

He offered his analysis by claiming that bitcoin’s recent surge above $ 42,200 provided liquidity for long positions with neutral momentum. Currently, according to the expert, the price of BTC is moving towards filling the liquidity gap above $ 42,000. This indicates potential volatility — liquidations worth $ 659 million have already taken place.

«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

Based on this, Negentropic believes that the bullish momentum could lead to the liquidation of $ 1 billion worth of short positions, potentially pushing the market up. The scenario could trigger a «short squeeze,» which occurs when the price of an asset rises sharply as a large number of sellers are forced to exit their positions.

This bullish outlook is in line with the decreasing selling pressure from investors who are locking in profits in Grayscale Bitcoin Trust (GBTC). The outflow of funds from GBTC seems to be slowing down in recent days, and China’s central bank has announced an injection of $ 140 billion into the financial system.

The co-founder of Glassnode stated in an earlier tweet that the liquidity surge has begun as China tries to support its markets with huge liquidity. He believes that this could be the catalyst that will push the cryptocurrency and stock markets in the first half of 2024.

As a reminder, the head of the investment company Euro Pacific Capital, Peter Schiff, known for his criticism of cryptocurrencies, suggested that bitcoin could reach a price of $ 10 million by 2031. According to the expert, this will happen if the US dollar follows the fate of the German paper mark. However, he did not specify how likely he believes this scenario to be.