With oil prices down 14.25% weekly, risk assets look set for a strong week.
But if that’s the base case, it might be worth rethinking. From a technical perspective, the weekly period from April 6 to 13 saw a clear turnaround in the oil sector, while Bitcoin saw a clear turnaround [BTC] closed 2.53% higher, marking the first such difference since the West Asian crisis began in early March.
On the macro side, this wasn’t random price action. The difference came after ceasefire developments briefly pushed crypto back into risk territory. However, a new message from US President Donald Trump has reignited market volatility after he referred to the possibility of ‘blocking’ the Strait of Hormuz.
The response was immediate. Oil prices rose 8.08% intraday, while Bitcoin continued to hover around $70,000. The bigger question now is whether this is the early stage for oil prices to rise as tensions around the Strait of Hormuz resurface. According to AMBCrypto, the first quarter rally provides a useful reference point here.
Technically, oil ended the first quarter up 76%, marking the strongest quarterly rally in years, while Bitcoin closed the quarter down 22%. Fast forward to now, and analysts are starting to price in the possibility of an even bigger oil move than in the first quarter, with investor Peter Schiff predicting a potential run towards $150, for example.
Naturally, the question shifts to whether Bitcoin, and crypto more broadly, could be headed for another first-quarter-style correction. Looking at traders’ current positioning and the broader macro backdrop, that scenario doesn’t seem that far-fetched. IIn fact, the answer could reveal itself within the next week alone.
Bitcoin Enters the Liquidity Flush Zone Amid Mounting Macro Pressures
The renewed escalation of the West Asian crisis could be just the beginning of broader macro pressures.
According to The Kobeissi Letter, US markets are moving in a different direction macro tough weekwith three of the top five publications focusing on the US economy. The latest CPI data has already pushed back expectations for rate cuts, while upcoming PPI inflation data and weekly unemployment claims are likely to play a major role in shaping risk sentiment going forward.
Against this backdrop, Bitcoin continues to rise sideways around $70,000, creating a classic volatility build as both long and short positions for the next move. However, with macro FUD coming back into the picture, leveraged long positions appear more vulnerable, increasing the likelihood of liquidity declines as markets de-risk.
As the chart above shows, there are over $4 billion worth of long positions stacked around $67,000.
Simply put, traders betting on upside have clustered their liquidity near this zone. A breakthrough below that could trigger a chain reaction of liquidations. According to AMBCrypto, this is where the differences between oil and BTC matter.
As geopolitical tensions escalate, rising oil prices could tighten financial conditions. If that momentum continues, Bitcoin’s chances of massive liquidity increase. Add this week’s macro releases to the mix and a liquidation of the stacked long positions becomes a real possibility, meaning a return to sub-$65k by the end of the week wouldn’t be that far-fetched.
Final summary
- The strength of the oil sector and geopolitical tension put Bitcoin’s long cluster at risk of a liquidity flush.
- With a macro-heavy week ahead, a move towards $65,000 becomes a likely target if sentiment turns away from risks.