Bitcoin Long Liquidations Surge As Mid-week Excitement Fades

Bitcoin price is back in bearish territory as the larger crypto market follows the king coin’s lead into the red zone. Despite short-term surges in the last few day, BTC price has remained largely bearish around press time. Bitcoin traded at $82000 noting close to 6% decline in the last 2 hours as of time of writing.

Bitcoin had a bit of excitement on Wednesday as Liberation day hype triggered some upside. BTC rallied as high as $88,563 during the trading session but then tariff war escalation slapped down any bullish momentum.

Bitcoin tanked as low as $81,188 during Wednesday’s trading session, closing the day at $82,502. This outcome was largely because tariff wars reached new heights with the European union announcing plans to retaliate.

Consequently, the pullback resulted in a substantial surge in Bitcoin liquidations. Roughly $180.15 million worth of BTC was liquidated. The total crypto market liquidations amounted to almost $500,000.

Source: X

Despite the substantial liquidations, they were still relatively low compared to periods when the market experienced extremely high liquidations. Especially those linked to highly leveraged market scenarios.

Bitcoin appetite for leverage is declining

Bitcoin’s estimated leverage ratio experienced a significant surge in March. This is because many traders expected that the market would bounce back after a bearish February. However, that was not the case and March also turned out to be a bearish month.

The surging appetite for leverage in March was characterized by heavy liquidations especially in the first and last weeks of the month. The recent market conditions and previous liquidations have hammered down on leverage traders and this may explain why the estimated leverage ratio dipped sharply in the last 7 days.

Bitcoin estimated leverage ratio and long liquidations | Source: CryptoQuant

The lower leverage suggests that consequent upside might not be as sensitive to liquidations as was previously the case. Especially since spot market activity in March was notably low.

Bitcoin could potentially rally back above $90,000 and sustain prices there if strong spot market demand makes a comeback. Especially under low leverage conditions.

Can Whales shield Bitcoin price from tanking below $80,000?

We previously observed a high possibility of Bitcoin price tanking below $80,000 especially if the tariff wars continue escalating. Well, while the latter appears to be in play, whale activity has notably made a comeback of some sort.

Bitcoin large holder netflows registered a noteworthy spike in the last few days which indicates that the latest rally attempt supported by whales. For perspective, BTC large holder flows amounted to -309.71 BTC on 30 March but jumped to 19,980 BTC as of 2 April.

Bitcoin large holder flows | Source: IntoTheBlock

The whale inflows amounted to roughly $1.63 billion which may have been the reason why traders expected the bulls to bounce back strong. The whale accumulation does not necessarily mean Bitcoin will continue rallying especially if it cannot sustain demand.

Tariffs have been the main reason for weak investor sentiment in the stock and crypto markets. This suggests that sustained demand may not happen unless things cool down.

On the other hand, recent whale accumulation may aid in shielding BTC from declining below $80,000 . If this happens then Bitcoin could experience a demand build-up above the same key price point. However, if things get worse, then prices may continue facing downward pressure.

What’s next for the markets after Liberation day?

U.S President Donald Trump just commented regarding the state of the market after the recent tariffs war escalation. He noted that the operation is over which may suggest that his administration might ease off the tariff wars.

Source: X

While this may offer some relief among investors, the impact of the newly implemented tariffs could potentially continue to haunt the markets.

Analysts have expressed concern that inflation might be on the rise if the average tariff rate stays above 29%. This is because the biggest impact will be higher prices which will be transferred to consumers.

This is why market participants are eager to see what the FED will announce during the next FOMC meeting. Meanwhile, these developments have resulted in record high levels of uncertainty as seen with the Trade Policy Uncertainty Index. This could present more challenges for Bitcoin in its recovery attempts.

Source: X