Key Points:
- Bitcoin fell toward $95,000 into the May 4 weekly close, driven by liquidity hunts around spot prices.
- Major liquidation clusters sit between $95,700–96,000 for longs and $96,500–97,000 for shorts.
- The Federal Reserve’s May 7 rate decision is expected to maintain rates, with cuts now priced for June.
- On‑chain analysts highlight support at $91,500–92,000 as critical for resuming the all‑time high trend.
- Institutional players like MicroStrategy and Strategy Investors continue to accumulate Bitcoin despite macro headwinds.
- Altcoins remain sensitive to macro shifts, with recession fears and deglobalization weighing on broader crypto markets.
Market Overview and Price Action
Bitcoin (BTC) closed the week ending May 4 with a sharp retreat toward the $95,000 level, following a ten‑week high earlier in April. Data from Cointelegraph Markets Pro and TradingView show that BTC/USD had surged above $97,000, hitting its highest levels since late February, before profit‑taking triggered a drop into the weekly close. This pullback unfolded amid growing macroeconomic uncertainty, as traders anticipated how Federal Reserve policy might shape risk‑asset performance going forward.
Throughout the first week of May, Bitcoin’s declines were not isolated; equities and the U.S. dollar also faced turbulence. Yet, relative to other risk assets, Bitcoin’s fall was modest—sparking discussions on whether it may be carving out a new role alongside traditional safe havens such as gold. As of May 5, BTC was trading in a narrow band around $95,500, with intraday swings of 2–3% reflecting market participants’ jitters ahead of the Fed announcement.
Liquidity Clusters and Liquidation Patterns
A key driver of Bitcoin’s volatility has been liquidity clustering—zones where numerous stop‑loss and take‑profit orders congregate around round numbers. According to CoinGlass data, long positions are densely packed between $95,700–96,000, while short positions cluster at $96,500–97,000, creating a “magnetic” effect on price action. When Bitcoin approached these levels on May 2–4, rapid order executions sparked cascading liquidations, amplifying volatility around the weekly close.
Liquidations of both longs and shorts reached multi‑month highs, as high‑leverage traders on derivatives platforms were unable to adjust positions swiftly enough. This phenomenon—often termed “liquidity hunting”—occurred multiple times over the past fortnight and highlights the risks inherent in crowded price zones. For traders, understanding these liquidity clusters is essential: it offers both opportunities for capturing swift moves and warnings about areas prone to sudden price swings.
Trader Sentiment and Key Price Levels
Beyond liquidity zones, sentiment among retail and professional traders has gravitated toward specific price thresholds. Popular X‑user TheKingfisher noted that the $95,700–96,000 range serves as critical long‑liquidation territory, while $96,500–97,000 is a magnet for shorts—a dynamic likely to produce choppy trading as each side battles for dominance. Meanwhile, BitBull summarized that $94,000–97,000 saw significant position clearouts over the weekend, underscoring the intensity of profit‑taking around these levels.
On‑chain analyst Michaël van de Poppe has meanwhile focused on longer‑term technical support, pointing out that Bitcoin’s ability to stay above $91,500–92,000 would validate a continuation toward a new all‑time high (ATH). After breaching the $87,000 resistance level earlier in April, van de Poppe observed that BTC had successfully flipped back into a bullish consolidation above $92,000, setting the stage for renewed upward momentum. For momentum traders, these support levels are pivotal: dips toward $92k could offer attractive entry points, whereas a break below might trigger deeper corrections.
Macro Outlook: Fed Rate Decision and Volatility
All eyes are on the May 7–8 Federal Reserve meeting, where policymakers are widely expected to maintain the current 4.25–4.50% target rate. According to the CME Group FedWatch Tool, there is a 97.3% probability of no rate change at this meeting, with market participants shifting cuts to June and beyond. This dovish tilt for June has sent rate‑cut odds above 60% for the June 18 meeting, a scenario that could inject fresh volatility into risk assets, including cryptocurrencies.
Fed Chair Jerome Powell faces competing pressures: persistent inflation risks, trade‑policy uncertainties under the new administration, and public calls from political figures for rate relief . However, Powell has signaled caution, suggesting that the central bank will require more evidence of sustained disinflation before easing policy. In the lead‑up to the announcement, historical patterns indicate that the crypto market often experiences mid‑week volatility, as speculators adjust positions in anticipation of shifting rate expectations.
Institutional Influence and On‑Chain Indicators
Despite short‑term turbulence, institutional investors remain steadfast. MicroStrategy’s Q1 2025 report revealed the acquisition of over 6,500 BTC, bringing its total holdings above 200,000 BTC. This ongoing accumulation underscores a bullish institutional thesis: Bitcoin as a digital store of value immune to central‑bank monetization policies. Similarly, the Saylor‑led Strategy Investors announced a $21 billion common stock offering specifically earmarked for further Bitcoin purchases, reflecting confidence in long‑term demand despite a $4.2 billion paper loss in Q1.
On‑chain metrics support this narrative. Exchange net flows have shown sustained outflows—indicative of hodlers keeping coins off liquid venues—and active wallet addresses have ticked higher, signaling growing network usage. Miners continue to hold or slowly liquidate rewards, suggesting faith in price appreciation. These institutional and on‑chain indicators paint a picture of foundational strength beneath the surface volatility.
Altcoin Correlations and Broader Crypto Market Implications
Bitcoin’s dominance waned slightly as traders rotated into altcoins, but the broader market still mirrors macro sentiment. According to Amberdata, Ethereum (ETH) and Solana (SOL) saw 19% and 22% weekly losses respectively amid rising recession fears and tariff‑related disruptions—a trend reflective of overall risk‑off sentiment in equities. Crypto Rover’s FedWatch analysis highlights that lower rate expectations for June could spur renewed speculative capital flows into higher‑beta assets, potentially catalyzing an altseason if Bitcoin stabilizes above key support.
That said, altcoins remain more vulnerable to liquidity shocks. The correlation between the U.S. Dollar Index (DXY) and Bitcoin sits at –0.65 over the past month, reinforcing Bitcoin’s inverse relationship to dollar strength—and by extension, altcoin performance. Traders eye protocols with on‑chain utility, such as DeFi governance tokens and layer‑2 scaling solutions, anticipating that loose monetary policy could rekindle growth in decentralized applications.
Risk Management Strategies for Traders
Given the confluence of liquidity hunts, Fed uncertainty, and clustered positions, robust risk controls are paramount. Traders should consider:
- Position Sizing: Keep leverage under 5× on derivatives platforms to avoid forced liquidations in thin markets.
- Staggered Entries: Layer into positions around support levels (e.g., $92k) rather than all‑in at a single price.
- Stop‑Loss Bands: Place stop‑loss orders outside known liquidation clusters to circumvent “stop‑hunt” events near $95.7k–97k.
- Portfolio Diversification: Balance BTC exposure with stablecoins and alternative assets to mitigate drawdowns.
Historical analysis shows that Bitcoin can extend corrections by 10–15% even after meaningful rebounds, suggesting that disciplined stops and profit‑taking can preserve capital during protracted pullbacks.
Future Outlook and Potential Scenarios
Looking past the May Fed meeting, traders are pricing in three to four rate cuts by year‑end, totaling approximately 75–100 basis points of easing. Under this scenario, Bitcoin could find tailwinds from historically low‑yield environments, reigniting momentum toward new ATH ranges. Conversely, if inflationary pressures persist or geopolitical shocks reignite, the crypto market could remain range‑bound between $85k and $100k through Q3.
Key scenarios to watch:
- Bull Case: Fed cuts begin in June, macro risk appetite returns, Bitcoin holds $92k support, leading to a breakout above $100k in Q3.
- Base Case: Fed holds through July, rate cut odds remain muted, Bitcoin consolidates between $90k–$98k.
- Bear Case: Persistent inflation and hawkish Fed rhetoric spark renewed risk‑off, Bitcoin tests $85k–$88k, with altcoins underperforming.
Conclusion
Bitcoin’s retreat toward $95,000 has laid bare the market’s sensitivity to macro events, liquidity hunts, and clustered trading behaviors. As the May 7 Fed decision approaches, the interplay between rate expectations and risk asset dynamics will dictate short‑term volatility. Yet, robust institutional accumulation and positive on‑chain metrics underscore a bullish longer‑term narrative. Traders who navigate key support levels, manage leverage prudently, and diversify across assets may emerge best positioned to capitalize on the next leg of crypto market evolution.
