Bitcoin recently experienced a significant pullback, dropping by 8.66% and retesting sub-$80,000 levels due to the impact of tariffs announced by Trump. This led to $1.30 billion in liquidations and a decrease in market capitalization by over $130 billion. Despite this, there is an increasing buy-side interest indicated by the rising bid-ask ratio and steady retail long positions at 73%. Historically, similar setups have resulted in liquidity sweeps and sharp reversals, raising the question of whether this dip could be another bear trap.
Market sentiment is currently heavily influenced by the upcoming FOMC meeting, with expectations of multiple rate cuts to counter the effects of tariffs and a potential economic slowdown. This uncertainty has led to a rise in recession odds and expectations of volatility. However, Bitcoin’s long-term holders have been accumulating, indicating confidence in the digital asset. Derivatives positioning remains bullish with Funding Rates staying green, but without a surge in spot demand, this positioning could unravel.
Bitcoin’s bullish structure is showing signs of weakness as key support levels are being breached while derivatives traders maintain long positions. The current equilibrium between long and short positions presents a setup for a potential bear trap. A liquidity cluster at $75,798 was recently swept, resulting in a bounce, but it remains to be seen if this indicates absorption or just temporary relief. With growing Open Interest, pressure from the Fed, and increasing accumulation by long-term holders, the current dip may be part of a high-risk, high-reward scenario for Bitcoin.
Overall, the future direction of Bitcoin hinges on factors such as the Fed’s actions, spot demand, and investor sentiment. A sharp reversal could occur if buy-side absorption holds, leading to a potential aggressive reclaim. The market remains volatile, and investors should closely monitor on-chain metrics and derivatives positioning to anticipate potential price movements. As uncertainties surrounding tariffs and economic conditions persist, Bitcoin’s resilience will continue to be tested, making it crucial for investors to stay updated on market developments.
