Anticipating Bitcoin’s Unstable Market: Understanding Key Macro Factors

Key Points

• Bitcoin investors are awaiting clarity from the upcoming Federal Reserve meeting amidst increasing risk-off flows.
• Despite market indecision and potential macro headwinds, large investors are strategically positioning long on Bitcoin.

Bitcoin investors are gearing up for the Federal Reserve’s forthcoming meeting, seeking clarity on the macroeconomic landscape. This comes at a time when risk-off flows are intensifying, creating potential for liquidity grabs at key levels.

Bitcoin’s Cautious Optimism

As we stepped into May, Bitcoin demonstrated a sense of cautious optimism. It reached a quarterly high of $97,915 early in the month. However, within less than a week, it lost 3.38% of its value, indicative of lingering FUD (Fear, Uncertainty, and Doubt) pressure.

This uncertainty in the market doesn’t indicate a structural weakness. Instead, it implies a strategic pause, with the next move dependent on post-FOMC (Federal Open Market Committee) liquidity conditions.

Investor Strategy Amid Macro Headwinds

Following the recent election, inflation data has become a significant market catalyst. Investors are now paying close attention to any signs of a shift in risk appetite based on these readings.

U.S. inflation has seen a sharp slowdown, with the rate dropping from 3% at the beginning of 2025 to a mere 1.45%, significantly below the Federal Reserve’s 2% target. This reduction in demand paves the way for liquidity injections, potentially priming risk assets for capital inflows.

In line with this sentiment shift, institutional whales are positioning long. One large player entered a $136 million Bitcoin position with 40x leverage, signaling strategic positioning in anticipation of a risk-on rally.

Bitcoin’s Liquidity Landscape

As macro-driven volatility increases in deflationary conditions, Bitcoin’s liquidity landscape is entering a crucial phase. On the 12-hour timeframe, three high-density liquidity clusters are converging, each surpassing $50 million in open interest, indicating an increased risk of liquidation.

A key moment was when $48.19 million in long positions were forcibly liquidated at $94,760.69, causing Bitcoin to fall to $94,600 within minutes. Despite this deleveraging event, the long bias remains dominant in the perpetuals market.

However, if the Federal Reserve adopts a hawkish macro stance, the risk appetite across the crypto derivatives landscape could deteriorate, leading to further downside volatility. Structurally, Bitcoin seems ready for directional expansion, leaning more towards a bearish outcome.