In recent developments, the crypto market has displayed a noticeable recovery in investor sentiment as concerns regarding global tariffs have begun to ease. Following comments from US President Donald Trump indicating a potential reduction in import tariffs on Chinese goods, risk appetite appears to be revitalizing among crypto investors. However, analysts caution that this renewed optimism may not shield Bitcoin (BTC) from volatility during weekend trading sessions, known for thin liquidity.
Despite a remarkable 11% recovery for Bitcoin over the past week, structural vulnerabilities, particularly during the weekend, are a cause for concern. Analysts from a prominent exchange remarked, “Sentiment improvements reduce fragility, but they do not eliminate structural risks like thin weekend liquidity.” Indeed, weekends have historically been precarious, with sharp price movements becoming commonplace, especially when market depth is low and open interest is high.
In context, Bitcoin recently dropped below $75,000 on April 6. This decline followed a brief period where Bitcoin seemed to decouple from the volatility seen in US stock markets. The situation was exacerbated by the aforementioned lack of weekend liquidity, with Bitcoin acting as one of the only large liquid assets available to investors seeking to de-risk during turbulent times.
Market analysts suggest that investors might have largely digested the fears associated with tariffs. Aurelie Barthere, a principal research analyst, noted, “It feels like we’ve maxed out on tariff-related fear.” Many in the market remain cautious but are waiting for signals indicating a return to a bullish trend. The sustainability of the recent rally hinges on breaking through previous resistance levels, while upcoming tariff negotiations may still introduce further volatility.
Although the current market sentiment serves as a more robust foundation, traders are advised to tread carefully. As Marcin Kazmierczak from the blockchain industry aptly stated, while sentiment recovery provides cushioning, weekend liquidity constraints can exacerbate price volatility. As the situation develops, investors need to monitor external macroeconomic events that could further influence the market.
Contemplating the future, Nansen has projected a 70% probability that the crypto markets could reach a bottom and begin a recovery by June, contingent on the outcomes of tariff negotiations and market conditions. As we navigate these turbulent waters, staying informed and cautious remains essential.
