Key Points
- Bitcoin may be nearing a key liquidity zone around $86k, with 77% of liquidation levels being long.
- A potential bull trap could be forming as market makers exploit overcrowded long positions.
Bitcoin’s weekly structure reveals that the high-FUD sentiment may be easing. The cryptocurrency has been consistently closing daily candles at an average of $82.60k, indicating underlying bid strength.
The Relative Strength Index (RSI) is still below overheated levels, suggesting that the momentum could still expand without triggering immediate profit-taking. Additionally, all exchanges recorded net outflows of 35,758 BTC on 11 April, at a price of $83,403 per BTC. This could be a signal of strategic accumulation.
Liquidity and Market Makers
However, from a liquidity perspective, the situation may not be as promising. A significant liquidity cluster has been forming above the current price levels. This could create a high-risk setup for a downside liquidity sweep.
At the time of writing, Bitcoin was approaching a key liquidity zone near $86.50k. However, there were signs of weakness. The retail long positioning has been relatively low, and the flat Open Interest (OI) indicated a lack of fresh capital inflows to support the move.
Moreover, 77% of liquidation levels clustered around this liquidity zone were long positions. This liquidity cluster could act as a magnet, potentially triggering a downside sweep as market makers capitalize on forced liquidations.
Unrealized Profits and Market Sentiment
The NUPL (Net Unrealized Profit/Loss) metric reveals the state of BTC’s current erratic price action. Since 07 March, it has stayed within the ‘Optimism’ phase, indicating that a significant portion of the market is in unrealized profit.
However, each time BTC approaches the $86k–$87k zone, the NUPL shifts into ‘Anxiety’, showing that market participants are starting to feel uneasy about their unrealized gains. This could suggest that profits, though not yet realized, might soon be taken off the table.
With 77% of liquidations concentrated in long positions around this critical liquidity cluster, a downside sweep could be triggered. This would lead to forced liquidations, potentially driving BTC lower. Unless Bitcoin decisively breaks out of this range-bound structure, the risk of further volatility and liquidation cascades remains high.
