Bitcoin holds $40k over Easter but low liquidity, ‘capitulation’ risk haunts traders

Bitcoin (BTC) opted for compression over the Easter weekend, saving nervous traders a renewed dive below $40,000.

BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView

Derivatives traders take no risk

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD moving in a narrowing range with $40,700 as the ceiling on Saturday and Sunday.

The pair saw little movement as the holiday season began as United States stock markets were shut down as of Good Friday, allowing crypto to avoid correlation-based volatility.

Since Monday is also a non-trading day, bitcoin has been set to four days “off-hours”. While this meant stock correlation was less important, there were other forces at play ready to shock sentiment.

Market liquidity remained lower than on weekdays and while this was usual, some feared sudden moves due to thinner order books could be amplified.

Deribit Insights, the research arm of trading platform Deribit, analyzed derivatives movements over the weekend and identified liquidity as an aspect driving investors’ real-time decisions.

Meanwhile, a slight zoom out from popular trader and commentator Pentoshi provided a more cautious perspective.

For him, just a recapture of levels well above the current tight trading range on low frames would be enough to get a more optimistic sense of what might be next for BTC/USD.

“44.5k is the most important point for bullish momentum at the moment. 42k 1D Resistance”, he summarized to Twitter followers on Saturday alongside an explanatory chart.

“Below bias is for redistribution and another leg down. I think buyers need to step in pretty quickly.”

Annotated BTC/USD chart. Source: Pentoshi/Twitter

100 days until the “surrender”?

Pentoshi, meanwhile, wasn’t the only voice predicting long-term gains but short-term pain for Bitcoin — a narrative that had gathered momentum throughout 2022.

Related: Bitcoin is clinging to the $40,000 support as the focus returns to the BTC price “supercycle”.

Analyzing the market action, Kevin Svenson, known for his bullish sentiment on BTC on social media, warned that the current chart behavior mimics the period just before Bitcoin’s stock market crash in late 2018.

While this event followed a long period of lower lows throughout the year, Bitcoin has made higher lows in 2022, he noted, but it wouldn’t take much for the tide to turn and “capitulation” to occur.

“The difference between those higher lows and a crash right now is significant, so I think it’s a bit stupid to just blindly stand to one side and not consider anything else,” he said.

Svenson added that in terms of following a historical pattern, Bitcoin is “arriving” by hitting a macro bottom about 800 days after each block subsidy halving. The last halving – on May 11, 2020 – was 706 days ago.

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