Arman Shirinyan
Bitcoin could be on the verge of a significant short squeeze that could potentially lead to a significant breakout
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According to Bitcoin analysis provided by a Glassnode analyst, we saw a significant increase that pushed the price to $42,000, a move that provided significant liquidity for long positions. This move is considered neutral and is not due to strong bullish or bearish impulses.
The liquidity gap that exists around the $42,000 level is now being targeted by the market. This gap acts like a magnet for the price, attracting it to fill the gap, a phenomenon that is often accompanied by increased volatility. Recent price movements are consistent with this theory as Bitcoin attempts to close this gap. Around $659 million in liquidations were made, indicating an extremely active market environment.
BTC/USD chart from TradingView
From a technical perspective, the chart shows that Bitcoin is currently testing the resistance level at $42,300. Should it manage to decisively break through this level, the next significant resistance is likely to be found near the $43,300 area, which corresponds to the recent high. On the other hand, a support level can be identified around $39,900, which coincides with recent lows and provides a psychological support level.
If bullish momentum continues, particularly reinforced by positive market news or sentiment, it could trigger a cascade of short position liquidations. It is estimated that such a scenario could result in around $1 billion in short liquidations, which would provide a significant upward push to the market.
If Bitcoin maintains its uptrend and breaks the $43.3K resistance, we could see a significant bullish phase with targets potentially extending to the $47K area and, if possible, up to $50K, where the next level of resistance would likely be encountered. Of course, if digital gold fails to maintain its current pace, it could end up retesting its support at $39,000.
About the author
Arman Shirinyan
Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.
Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with in-depth analysis of crypto projects, and technical analysis of cryptocurrency trading pairs.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
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