Bitcoin Price plunging: Bear Trap or Correction?
Bitcoin recently lost a key support level, while the positioning of retail investors in futures remains stubbornly bullish. This creates an uncertain situation where the market's direction hinges on a recovery in spot demand.
Historically, such situations can lead to a sharp price reversal after a so-called "liquidity sweep". However, the approaching FOMC meeting and growing economic uncertainty are adding to the tension in the market. Expectations for interest rate cuts are increasing, which could influence Bitcoin's price.
Disclaimer: This is not financial advice. Always consider conducting investigation and professional advice.
Market Reaction and Liquidations Following News
The announcement of new tariffs had an immediate impact on the markets. Bitcoin saw a significant decline and retested levels below $80,000, with a substantial amount of liquidations taking place. Despite this drop, the bid-ask ratio remained relatively high, and many retail investors held onto their long positions.
Persistent Downward Pressure
Historically, such situations can lead to a sharp price reversal after a so-called "liquidity sweep". However, the approaching FOMC meeting and growing economic uncertainty are adding to the tension in the market. Expectations for interest rate cuts are increasing, which could influence Bitcoin's price.The Role of Long-Term Holders and Derivatives Market
Long-term Bitcoin holders appear to be strengthening their positions, while positions in derivatives remain unchanged. Funding rates have stayed positive throughout the week, indicating sustained bullish leverage. However, without a strong increase in spot market demand, these positions risk being unwound. So far, on-chain data shows that interest in buying during the recent dip has been moderate, suggesting that investors may be more focused on risk management than active accumulation.A Fragile Structure with Potential for Recovery
The recent price drop has weakened Bitcoin's bullish structure. Nevertheless, the current equilibrium between long and short positions could create fertile ground for a bear trap, where a sharp upward movement is possible if selling pressure is absorbed. A recent "sweep" of a liquidity cluster provided a small bounce.Conclusion: High Risk, High Reward Scenario?
Given the increasing open interest, pressure from the central bank, and accumulation by long-term holders at a multi-year high, Bitcoin's recent dip could align with a "high risk, high reward" scenario. The market's ability to absorb selling pressure will be crucial for future price development.Disclaimer: This is not financial advice. Always consider conducting investigation and professional advice.