Bitcoin Price Drops: Key Indicators Suggest Potential Reversal
Bitcoin Price Drops – “Tariffs are here to stay,” stated former President Donald Trump, and the market swiftly reacted. Bitcoin (BTC) dropped by 8.66%, dipping below the $80k mark as $1.3 billion in liquidations swept across the market. This has left 478,000 addresses at a price of $78,981 hovering near breakeven, while 5.94 million wallets that bought Bitcoin at $61,129 cashed out their profits. As long positions unwound and weak hands folded, Bitcoin lost over $130 billion in market capitalization.
Rising Buy-Side Interest Despite Market Drop
However, the bid-ask ratio is rising, signaling increased buy-side interest. Retail long positions have remained steady at 73%. Historically, similar setups have been followed by liquidity sweeps, often resulting in sharp reversals. A similar pattern emerged in March, when Bitcoin bounced sharply from $77k. Could this dip represent another potential bear trap?
FOMC Countdown and Market Uncertainty
With the FOMC meeting just 30 days away, markets are on edge. Despite growing FUD (fear, uncertainty, doubt), the bid-ask ratio remains in the 99th percentile, suggesting sustained buy-side momentum. The Q2 economic uncertainty is fueling speculations of rate cuts, with some analysts predicting up to four rate cuts to counter the demand slowdown caused by tariffs. Recession odds have increased from 40% to 60%, and even JP Morgan is now forecasting rate cuts in the near future.
Bitcoin’s Bullish Resilience Faces Critical Test
For Bitcoin, the situation is tense. Its resilience largely depends on how the Federal Reserve acts next. Until then, short-term volatility remains a risk, though long-term holders have been accumulating. Since April 6, 14,000 BTC have been added, marking a three-month high.
While derivatives positioning remains bullish, with Funding Rates (FR) staying green throughout the week, a surge in spot demand is needed to avoid potential unwinding of current positions.
In conclusion, Bitcoin’s current dip presents a high-risk, high-reward setup, with a potential bear trap on the horizon. The market’s next moves depend on how liquidity clusters are absorbed and whether spot demand strengthens.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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