• Bitcoin recorded its largest short liquidation of the year, a move that preceded a market rally.
• Liquidity inflow in the market, although high, could soon face major outflows.

Bitcoin [BTC] has been majorly bullish, taking a 3.19% rise in the past 24 hours, which helped it set a new weekly high of $107,106 within this period.

This shows the strong potential for Bitcoin to set a new all-time high, especially with liquidity inflows from market investors. However, the asset faces a major challenge.

Bitcoin hit record liquidation

Bitcoin on Binance recorded its largest short liquidation yet over the past 24 hours, as sentiment quickly shifted.

Short liquidation is an event that forcefully closes the positions of traders betting on a price decline, triggering their stop loss as the price trades higher.

In this case, it followed Bitcoin’s sharp move from a low of $103,195 to $105,535, a 3.48% jump. In total, these short traders lost $66.3 million within this period.

Short liquidation tends to open the door for further market rallies, as it indicates likely new capital inflow into the market, fueling momentum.

AMBCrypto’s analysis found that the liquidity inflow into the market has likely come from traditional institutions investing in Bitcoin.

Per the latest report, 10 Bitcoin spot exchange-traded funds (ETFs) saw a combined net inflow of 2,103 Bitcoins, worth $210.67 million.

BlackRock’s iShares contributed 1,250 Bitcoins to the total inflow, bringing its total Bitcoin holdings to 633,212, worth $66.28 billi

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Author: Olayiwola Dolapo