A divergence in a volatile market can cut both ways.
On the bullish side, if volatility breaks higher, a bear trap could send Bitcoin back above key resistance levels, triggering short squeezes and adding fuel to the FOMO trade. On the flip side, if volatility breaks lower, a deeper correction could trap overexposed longs and reinforce risk-off sentiment across the market.
Right now, Bitcoin’s technical setup seems to be playing out in real time. With macro uncertainty easing, the backdrop might be tilting towards the bullish scenario.
Meanwhile, $BTC has continued to chop sideways around $65K, creating the kind of liquidity-rich environment where a classic bear trap could emerge.
Hard data seemed to be supporting this setup too.
Notably, oil prices have resumed their downtrend after Q1’s nearly 70% rally, which coincided with Bitcoin’s 22% correction. The relationship is hard to ignore, especially as investors priced in the longer-term inflationary impact of rising energy costs, putting pressure on risk assets like $BTC.
Fast forward to Q2, and the picture is starting to shift. Oil prices are down more than 17% quarter-to-date, while Bitcoin has corrected by just 6.5%. In other words, capital flows into oil have cooled significantly relative to Bitcoin [$BTC] – A sign that investor risk appetite may be gradually improving.
The ongoing peace deal further supported this trend. As geopolitical tensions ease, investors are becoming more willing to rotate back into risk assets. This could help explain why Bitcoin has held up relatively well, despite the recent correction.
This could raise the possibility that the current weakness is simply a liquidity sweep before the next move higher.
Macro relief vs on-chain caution – Bitcoin caught in a divergence
Despite macro conditions cooling down, this shift is still not fully reflected in Bitcoin’s on-chain signals.
Institutional capital, for example, is yet to show a strong dip-buying response. $BTC ETFs have continued to record net outflows, suggesting that large players are not yet fully participating in the recent risk-on rotation.
This weakness also aligns with a recent CryptoQuant report. According to the chart below, Bitcoin may be entering a zone that has historically marked bottom formation. However, $BTC’s STH MVRV index still seemed to point more towards capitulation than confirmation – Evidence that the market has not fully stabilized yet.
Against this backdrop, a hike in Bitcoin Open Interest could signal a higher-risk setup.
As one analyst noted, $BTC’s Open Interest has remained elevated relative to previous bottoming phases. Ideally, the market would see further unwinding through a slow bleed below $60K to reset positioning. Bitcoin’s press time divergence between the macro setup and on-chain signals supported this view too.
This, in turn, might help explain why Kalshi traders are pricing in 69% odds of $BTC first moving down to $55K, before a run towards $100K. This frames it as a structured positioning scenario, rather than a random bet.
Final Summary
- Bitcoin’s on-chain data and high Open Interest still look weak, despite improving macro conditions.
- Mismatch supports a view of a possible drop towards $55K first to reset positioning, before any move higher towards $100K.
