Bitcoin Recovers 11% as Trump Softens Tariff Stance, but Weekend Liquidity Risks Remain

Crypto investor sentiment has seen a significant recovery from global tariff concerns, with risk appetite returning among investors this week. This shift followed a softer tone from US President Donald Trump, who suggested that import tariffs on Chinese goods may “come down substantially.” However, analysts warn that the market’s structural weaknesses may still result in downside momentum during periods of weekend illiquidity.

Bitcoin (BTC) staged a near 11% recovery during the past week, but its rally has previously been limited by Sunday liquidity dynamics. Bitcoin fell below $75,000 on Sunday, April 6, despite initially decoupling from the US stock market’s drop on April 4 after US Federal Reserve Chair Jerome Powell warned that Trump’s tariffs may affect the economy and raise inflation. The correction was exacerbated by the lack of weekend liquidity and the fact that Bitcoin was the only large liquid asset available for de-risking.

While improved sentiment creates a more stable foundation, cryptocurrency markets are still susceptible to rapid movements during periods of reduced trading volume. “Sentiment improvements reduce fragility, but they do not eliminate structural risks like thin weekend liquidity,” analysts from Bitfinex exchange told Cointelegraph. “Historically, weekends remain vulnerable to sharp moves — especially when open interest is high and market depth is low,” the analysts said, adding that unexpected macroeconomic news can still increase volatility during low liquidity periods.

Cryptocurrency markets may have priced in the full extent of tariff-related concerns, according to Aurelie Barthere, principal research analyst at crypto intelligence platform Nansen. “It feels like we’ve maxed out on tariff-related fear,” she said, adding that markets were just waiting for the slightest signal that things are improving. However, she warned of more potential volatility amid the upcoming negotiations. Nansen previously predicted a 70% chance that crypto markets will bottom and start a recovery by June, but highlighted that the timing will depend on the outcome of tariff negotiations.

The tariff negotiations may only be “posturing” for the US to reach a trade agreement with China, which may be the “big prize” for Trump’s administration, according to Raoul Pal, founder and CEO of Global Macro Investor. Despite the positive sentiment, there are lingering concerns about liquidity risks, especially over the weekend. Analysts have taken a cautious stance on the short-term crypto market, indicating that a bottom may not be reached until late in the second quarter. They highlight that while long-term Bitcoin holders have resumed steady accumulation, additional market weakness is anticipated before a significant recovery occurs.

The technical indicators also suggest a bearish outlook. Bitcoin and the COIN50 Index, which tracks the performance of the 50 largest cryptocurrencies by market capitalization, have fallen below their 200-day moving averages. This technical signal is typically associated with prolonged downtrends. However, if the Federal Reserve were to pause its quantitative tightening policy, it could boost global liquidity and support digital asset markets. This potential move by the Federal Reserve is seen as a critical factor that could influence the market's trajectory in the near future.

Amid these market developments, Coinbase is making strategic operational moves. The company recently announced its expansion into a major fintech and compliance hub, with plans to hire over 130 employees. This initiative is expected to support compliance and customer service functions, further strengthening the company's operational capabilities. The Advanced Sentiment Index for Bitcoin has also turned bullish, reaching 67% despite risks associated with the US-China trade war. This index suggests that there may be a rally ahead, although the broader market uncertainties remain a concern. The sentiment recovery is a positive sign for the crypto market, but investors are advised to remain cautious given the potential for weekend liquidity risks and the broader economic uncertainties.