The market’s resilience only really becomes apparent during a heavy deleveraging period, which often leads to sudden fluctuations. The recent volatility surrounding US President Donald Trump has clearly played out in Bitcoin [BTC] derivatives market.
For context, on March 22, President Trump issued a 48-hour ultimatum to Iran, sending markets into turmoil. The next day, he paused the attacks on Iranian energy, and BTC soared past $71,000.
This sequence of events led to a textbook liquidation cascade.
Traders lost a total of $813 million in two days, with $282 million in long positions wiped out on March 22 and $531 million in short positions liquidated on March 23. highlighting the intensity of the short-side squeeze.
The rapid shift in market sentiment was also reflected in the Long/Short ratio. According to the report, the ratio changed sharply from 6.7:1 long-heavy to 12.4:1 short-heavy in just 24 hours, demonstrating how rapid and intense the deleveraging was.
And yet Bitcoin did not budge. From a technical perspective, BTC is up almost 5% this week, regaining the $71,000 level.
Even after traders lost more than $800 million, BTC’s ability to hold this key psychological level shows how resilient the market remains and how well it absorbs major shocks.
CryptoQuant supported this view, calling this a “much-needed” setup to shake out weak hands, noting that traders had overloaded the Open Interest and crowded out their positions, giving Bitcoin room to reset and strengthen.
In this context, the question remains: does this setup actually reinforce a BTC bottom, or was it just a short-lived bear trap?
Does Bitcoin lure traders into an illusion?
The ‘buy the fear’ approach is often the driving force behind Bitcoin’s local core thesis.
Simply put, when smart money strengthens, it shows the market is absorbing the selling pressure. In particular, the way BTC handled its recent $800 million liquidation reinforces this setup. Moreover, traders seem to be positioning themselves for thatwith whales adding leveraged long positions.
The bigger question, however, is whether this power also translates into the chain. According to a recent report from Santiment, Bitcoin whale activity has become historically quiet.
On-chain statistics from the past week reflect this caution, showing only 6,417 daily $100,000+ BTC transfers, the lowest since September 2023, and 1,485 daily $1 million+ BTC transfers, the lowest since October 2024.
In the meantime, Bitcoin’s Coinbase Premium Index (CPI) continues to decline, indicating weaker demand.
Taken together, these signals suggest that despite recent price strength, on-chain activity has not confirmed a broad rally, showing that the market is still digesting risk before making the next move.
According to AMBCrypto, this contradicts CryptoQuant’s view that deleveraging over $800 million has taken Bitcoin to new heights.
Instead, whales are building long positions, but spot momentum remains weak, making BTC’s apparent strength feel more like an illusion. If demand doesn’t pick up soon, this setup could turn into a bull trap, meaning any talk of a Bitcoin bottom is still premature and traders should remain cautious.
Final summary
- Bitcoin shows resilience despite over $800 million liquidation. The price managed to regain $71,000, but on-chain metrics and weak momentum indicate that the rally may not have broad support.
- Long positions are building, but low transfer volumes and falling CPI point to a potential illusion that could turn into a bull trap.