Bitcoin (CRYPTO: BTC) rebounded from its lows to over $43,000 and analysts anticipate a potential short squeeze triggering liquidations.

What Happened: Arkham Intelligence data indicates that Grayscale outflows have significantly decreased, with Grayscale sending 6,900 BTC, worth $289.5 million, to Coinbase on Monday.

This marks a 34% drop from the last transfer from Friday Jan. 26, and a 45% decline from their average daily transfer size last week, which was $530.2 million. While the size of the initial outflows from Grayscale had disappointed investors, the decrease is likely to boost their confidence.  

Technical analysts agree, with crypto analyst DonAlt tweeting, “BTC absorbing selling like a chad. One of my favourite indicators of strength.”

Co-founder of blockchain analytics firm Glassnode Negentropic, tweeting under a pseudonym, said: “Liquidity is KEY.” He sees the bullish momentum in Bitcoin prices leading to $1 billion in short position liquidations and divided his analysis into two parts – Bitcoin Analysis and Liquidity Gap.

In the past 24 hours, Bitcoin liquidations stand at $40.9 million with $25.82 million in short liquidations and remaining in long based on Coinglass data. Most of the liquidations ($28.12 million) were witnessed in the past 12 hours.

See Also: SEC Postpones Decision On Grayscale's Ethereum ETF Proposal, Seeks Public Input

Glassnode data indicated a surge in Bitcoin active addresses, reaching 849,468 as of Dec. 28, 2023, compared to 706,754 as of Dec.25, 2023.

Read Next: SEC's Hacked Tweet On Bitcoin ETFs Causes Massive Trader Losses, Over $220M Liquidated

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