Bitcoin Plummets 10% Amid Political Fallout, Reclaims 5.2% in Three Days

Bitcoin recently experienced a significant shakeout, with billions of dollars being wiped out due to a flood of sell orders in the perpetual swap market. This triggered a cascade of long liquidations, slashing Open Interest by over $10 billion from its peak. Despite this turmoil, there are early signs of market exhaustion, suggesting a potential macro bottom and setting the stage for a market reset.

The recent political fallout sparked a serious shakeout, with nearly $1 billion in crypto liquidated in a flash. Bitcoin dropped around 10%, bottoming out at $100,421. However, it quickly rebounded, climbing 5.2% in under three days and reclaiming nearly half of what it lost. This rebound, though minor, indicates a potential turnaround. Bitcoin’s Realized Cap has hit a new all-time high of $935.10 billion, suggesting that a lot of Bitcoin has been moving around at higher prices recently. This shift in market psychology shows traders are eyeing BTC’s current price as a sweet spot to load up, reinforcing a potential bottom that could pay off big down the road.

The Fear and Greed Index, which captures market emotion, tanked to 46 following the recent political fallout but bounced sharply back to 55. This indicates that the market is teetering on the edge of the “greed” zone, historically a classic green light for accumulation rallies. The number of new Bitcoin addresses has also turned positive, meaning even new buyers are feeling the FOMO kick in. On June 4th, around 10k BTC vaulted off spot exchanges at $104,700 each, backing the thesis of a potential macro bottom.

The recent 14-day deleveraging was not a meltdown but a “healthy reset,” clearing weak hands and priming Bitcoin for its next leg up. At $105k, BTC is sitting on a springboard ready to launch. Despite recent geopolitical events and market volatility, Bitcoin retains several bullish drivers, supported by its dominance in the market and its correlation with macroeconomic trends. The market has shown mixed signals, with Bitcoin stabilizing around $108,000 following recent tariff announcements. This stabilization suggests that the market may be finding a new equilibrium, despite the less-than-ideal outcome of the Federal Open Market Committee (FOMC) meeting.

Analysts have pointed out that a retest of the sell-side liquidity zone may confirm further downside, with lower highs reinforcing selling pressure and suggesting weakened bullish momentum. However, according to the analyst's forecast, after a potential 10% drop in Bitcoin and a 20% drop in Ethereum, both cryptocurrencies may start to make a solid price jump. This forecast is based on the idea that the market may be oversold, and a correction could lead to a renewed uptrend. The potential for a macro bottom and the renewed commitment to Bitcoin's native chain are positive signs, but the market's reaction to geopolitical events and other external factors will continue to play a significant role in its future direction.