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According to the Bitcoin analysis provided by a Glassnode analyst, we have seen a notable surge that took the price to $42,000, a move that provided significant liquidity for long positions. This move is considered neutral and not driven by strong bullish or bearish impulses.
The liquidity gap that exists around the $42,000 mark is now being targeted by the market. This gap acts as a magnet for price, attracting it to fill the void, a phenomenon often accompanied by increased volatility. The recent price action aligns with this theory as Bitcoin endeavors to bridge this gap. In the process, approximately $659 million in liquidations have transpired, signaling a highly active market environment.
From a technical standpoint, the chart demonstrates that Bitcoin is currently testing the resistance level at $42,300. If it will decisively break through this level, the next significant resistance is likely to be found near the $43,300 region, which corresponds with the recent peak. On the downside, a support level can be identified around $39,900, which aligns with recent lows and provides a psychological level of support.
If the bullish momentum continues, and especially if reinforced by favorable market news or sentiment, it could catalyze a cascade of short position liquidations. It is estimated that such a scenario could trigger around $1 billion in short liquidations, providing a substantial upward thrust to the market.
If Bitcoin maintains its upward trajectory and breaches the $43.3K resistance, we might see a significant bullish phase with targets potentially extending toward the $47,000 region and, if possible, to $50,000, where the next level of resistance would likely be encountered. Obviously, if the digital gold fails to maintain the current pace, we could see it retesting its support at $39,000.