BTC Fakeout: Short Liquidations and Correction After Record Weekly Close

Classic Liquidity Grab

The price action of Bitcoin demonstrated some “classic” moves around the weekly close on May 18.

A surge to new multi-month highs near $107,000 was followed by a 4% correction within just a few hours.

This spike cleared a block of liquidity located near historical highs, with BTC/USD executing a sort of “liquidity grab” — first targeting short liquidations, then trapping late longs.

“Classic liquidity trap above the previous high and reversal down,” commented crypto trader, analyst, and entrepreneur Michaël van de Poppe on X.

“I think we’ll do the same at $100K before breaking out above the historical highs. These are the zones where we accumulate Bitcoin.”

Data from the monitoring platform CoinGlass shows that ask liquidity was replenished around $107,500, preventing further upward movement. The market then removed bid liquidity down to $102,000.

The total value of crypto market liquidations in the past 24 hours at the time of writing amounted to $673 million.

Discussing Bitcoin’s outlook, trader CrypNuevo was among those urging caution, advising against entering positions at any level above $100,000 within the current price range.

“From a risk management perspective, I see no reason to enter a long position at the current market price,” he wrote in an X thread before the weekly close volatility.

“Yes, the price can go higher as the long-term trend structure (HTF) suggests, but as a trader, I’m looking for low-risk entries. Right now, we are at resistance. A breakout above would offer a much more attractive opportunity.”

CrypNuevo acknowledges that the bullish signals on higher timeframes (HTF) remain intact, emphasizing the retest of the 50-week exponential moving average (EMA) in April — an event that has historically led to new all-time highs.

Over the weekend, a new forecast also emerged, predicting Bitcoin could reach $116,000 in the coming days.

Bitcoin Registers Highest Weekly Close Ever

Though brief, Bitcoin’s latest weekly close became the highest ever recorded.

With an approximate value around $106,500, the weekly candle also marked a new all-time daily close.

Despite the subsequent 4% correction, traders quickly pointed to it as a sign of the market’s core intention to continue upward.

They see the move not as weakness, but as a confirmation of the market’s desire to test higher levels — with corrections being a healthy part of the accumulation phase before the next leg up.

Private asset manager Swissblock Technologies noted a key element to continuing the bullish trend.

“Bitcoin flirted with $107K, grabbed liquidity above $104K–$106K, but failed to hold position,” they summarized on X.

“It’s back in the range, and for now, support is holding. Bulls have one job: defend this range.”

CoinGlass data shows that May is traditionally a month of high volatility for BTC. The current 10% gain sits in the middle of a broad range of historical results, with less than two weeks left until the monthly close.

U.S. Trade War Continues as Bitcoin Ignores Rate Cut Expectations

The lack of major macroeconomic reports this week shifts attention to the Federal Reserve and U.S. trade negotiations.

Markets are watching for positive developments in trade relations between the U.S. and its partners. Treasury Secretary Scott Besant promises new tariffs for countries that do not negotiate in “good faith.”

News of a deal with China earlier this month sparked a sharp rally in stock markets, bringing relief to traders.

However, this week’s start may be less optimistic after Moody’s downgraded the U.S. credit rating, causing stock futures to drop 1% before Wall Street opened.

Amid renewed pressure on the dollar, analysts from The Kobeissi Letter suggest that Bitcoin and altcoins could still benefit from the current conditions.

“Crypto loves the Moody’s downgrade: Bitcoin is just 4% away from a new all-time high and is up over 40% from its April low,” they noted during the weekly close.

“With the U.S. dollar weakening and uncertainty rising, Bitcoin and gold are thriving. Volatility is Bitcoin’s best friend.”

Cryptocurrencies are also becoming more resilient to “hawkish” signals from the Fed, which has given markets reason to believe that rate cuts won’t happen before September.

Data from CME Group’s FedWatch tool shows only a 12% chance of a rate cut at the upcoming June Fed meeting. Jobless claims on May 22 could shift expectations if they deviate significantly from forecasts.

Fed Chair Jerome Powell will deliver a commencement speech at Georgetown Law Center on May 25, but it is not expected to contain significant policy commentary.

Crypto–Stock Correlation in Flux

Mixed reactions to the Moody’s downgrade have sparked debate over the correlation between crypto and U.S. stocks.

In its latest analysis, research firm Santiment failed to draw a definitive conclusion, describing the relationship as “somewhat correlated.”

“With the 90-day tariff pause between the U.S. and China starting Monday, markets remain near historical highs,” they summarized on May 17, referencing the S&P 500, Bitcoin, and gold.

Blockchain data provider RedStone Oracles distinguishes between short-term and long-term correlation.

While the 7-day correlation is negative, they told Cointelegraph that over a 30-day period, a “valuable correlation” exists between Bitcoin and the S&P 500 index.

Meanwhile, market participants express frustration that cryptocurrencies are increasingly influenced by the same volatility factors as stocks.

“It was much nicer when $BTC traded independently of stocks,” commented IncomeSharks to their followers on X, May 19.

“Now it just seems like a way for people to trade stock futures on weekends and mimic $SPY during the week.”

Volume Delta Warns of a “Local Market Top”

A new analysis of order book behavior attempts to determine what could drive Bitcoin back into price discovery.

Particular attention is paid to Binance — the exchange with the largest spot volumes. According to on-chain analytics platform CryptoQuant, volume delta is a key factor in sustainable price moves.

“Following the latest market correction, net spot volume delta on Binance turned positive again,” wrote contributor Darkfost in a May 18 “Quicktake” blog post.

“This signals increasing buying activity on the spot markets, but more importantly, it shows that selling pressure has significantly declined, even with BTC trading above $100,000. Historically, however, when Binance spot volumes rise too fast and sharply, it often coincides with local market tops.”