Is it a bear trap, or could the fall continue ?
As Bitcoin lost its key support level, retail investors remain heavily bullish. This dual-edged setup where the market direction will hinge on spot demand.
If liquidity absorbs the selling pressure, a volatility squeeze could trigger a rapid surge in prices. Derivatives traders’ positioning data reveals a balanced 50/50 ratio between long and short positions, a fertile ground for a perfect bear trap.
Admittedly, Bitcoin’s bullish structure now shows vulnerabilities with key support levels breaking, but derivatives traders remain heavily bullish. However, if buyer absorption persists, a violent reversal could be on the table.
On the liquidation heatmap chart, a $72.94 million liquidity cluster at $75,798 was wiped out, causing a 1.20% bounce. It remains to be seen if this is just a breather or a signal for a more sustainable reversal.
Uncertain macroeconomic environment that could support a rebound
In a volatile macroeconomic environment, marked by fears of an economic slowdown and speculations about Federal Reserve rate cuts, Bitcoin could stand out. Its long-term holders have indeed increased their buying in recent weeks.
In contrast, yesterday, the SP500 and Bitcoin rebounded following a “fake news” announcement indicating that Trump might pause the tariffs imposed on importing and exporting with China for 90 days. However, this news was debunked by CNBC minutes later, slowing down the rise of both assets.
Moreover, as Bitcoin’s fate will rely on whether the SP500 has found its bottom or not, it severely lacks liquidity to reclaim lost ground.
As shown in the above chart, the capital needed to drive BTC’s price up is such that strong volumes will be required to hope for a recovery. Even if BTC could fill its gap at $84,000 in the coming days, caution should be exercised.
It is in this context that a glimmer of hope remains. Liquidity M2 points to a BTC rebound in late April for the month of May. BTC has diligently followed the M2 liquidity for several months. We’ll have to wait and see if this trend continues.
Although the path to $80,000 still seems filled with obstacles, Bitcoin might be gearing up for an aggressive recovery if spot demand continues to absorb sales. Investors will need to pay attention to the Fed’s upcoming decisions to determine the course of events.
But much more will be needed to trigger a bull run. April may be more about sideways movement and volatility.
