Glassnode Co-Founder Warns: Bitcoin’s Surge Could Trigger A $1 Billion Liquidation Event – Here’s Why

A notable perspective recently came from the Glassnode co-founders Jan Happel and Yann Allemann, Negentropic on X, who recently shared insights into Bitcoin price dynamics. Notably, the analysts highlighted liquidity as a crucial factor for Bitcoin’s price trajectory.

Bitcoin Market On The Brink Of Spike In Volatility

Negentropic revealed that BTC’s recent ascent above $42,200 has created a significant liquidity pool for long positions, marked by a “neutral impulse” in the market.

This trend indicates that Bitcoin aims to bridge the liquidity gap above the $42,000 mark, which hints at potential volatility and significant market changes.

So far, about $659 million in liquidations have taken place,  leading Negentropic to predict that continuing the bullish momentum could trigger liquidations worth $1 billion in short positions.

This scenario could catalyze a market uplift through a “short squeeze,” a rapid price increase forcing short sellers to exit their positions. Such market movements often result in dramatic shifts, providing a fertile ground for Bitcoin’s growth.

Meanwhile, in a post uploaded last week, Negentropic linked the burgeoning liquidity in the crypto market to China’s efforts to stabilize its markets by injecting substantial liquidity. According to the Glassnode co-founder, this development could serve as a crucial catalyst for crypto like Bitcoin and equity markets as we progress into the first half of 2024.

This perspective aligns with the broader market recovery, as Bitcoin shows signs of resurgence following reduced selling pressure, particularly from the Grayscale Bitcoin Trust (GBTC).

Bitcoin trades for $43,166, up 6% in the past week. However, despite this uptick, the asset’s daily trading volume remains subdued, down from $26 billion last Monday to $14 billion today, indicating a cautious market sentiment.

BTC Bullish Signals Strengthen

Amid these market developments, bullish forecasts continue to emerge. Crypto analyst Jelle recently suggested that with Bitcoin reclaiming the $42,000 level, it might be “time to focus on longs once again.”

Echoing this sentiment, Michael van de Poppe, a prominent crypto analyst and pundit, expressed optimism in his latest YouTube video. He argued that the recent price correction in Bitcoin might have reached its conclusion.

Further supporting the bullish sentiment, Ali’s chart analysis reveals an increase in large Bitcoin holders. An additional 46 entities now possess 1,000 BTC or more, a 3% rise in just two weeks.

Featured image from Unsplash, Chart from TradingView