Bitcoin (BTC) experienced a sharp recovery on Tuesday, a move that triggered the liquidation of a significant volume of short positions. This price action followed market reactions to geopolitical comments from former U.S. President Donald Trump regarding tensions in the Middle East, introducing a layer of macro-driven volatility to the cryptocurrency’s technical landscape.
Key takeaways:
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Bitcoin’s order book liquidity is rebuilding as the price rebounds toward the $71,000 level.
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Analysts are watching for a potential liquidity grab, or rapid price sweep, toward the $72,000 region next.
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Underlying momentum shows improvement, supported by rising spot trading volumes and sustained inflows into U.S.-listed spot Bitcoin exchange-traded funds (ETFs).
BTC/USD 1-hour chart. Source: Cointelegraph/TradingView
Liquidity Clusters Shape Bitcoin’s Near-Term Path
According to data from TradingView, BTC/USD was trading around $70,780 on Bitstamp at the time of writing, representing a 4.5% gain over the preceding 24-hour period. The rebound from recent lows has been characterized by a classic “short squeeze,” where a rising price forces traders with leveraged short bets to buy back their positions, accelerating the upward move.
Market intelligence from CryptoReviewing indicated that this recent pump above the $70,000 threshold liquidated approximately $186 million worth of short positions in a 24-hour window. This activity is clearly visualized on liquidation heatmaps, which aggregate pending buy and sell orders.
The immediate area above the current price, between $70,000 and $72,000, appears to have relatively thinner liquidity. This makes it a potential target for a swift “liquidity grab” where price briefly moves through the zone to trigger stop-loss orders before potentially reversing. A more substantial cluster of liquidity sits higher, between $74,000 and $75,000, which CoinGlass identified as the largest short liquidation cluster on the weekly chart.
However, analysts note that the total liquidity below the current price is substantially larger. “Below at $64,000-$68,000 we have large liquidity clusters, totalling roughly 4x more liquidity, making this the ‘more likely’ zone to visit next from a liquidity perspective,” analysts commented, suggesting the market may see a retest of lower support levels after a potential move toward $72,000. They added, “Bulls just applied the pressure,” acknowledging the successful defense of higher levels.
Bitcoin 24-hour liquidation heatmap. Source: CoinGlass
Context on Liquidity Analysis
Liquidity heatmaps are a tool used by many traders to identify areas where a large number of stop-loss orders or pending orders are concentrated. These zones often act as magnets for price, as market makers and large players may seek to “hunt” these stops to fill their own orders at more favorable prices. The analysis above interprets the distribution of this liquidity to outline probable next steps for price movement.
Bitcoin weekly liquidation heatmap. Source: CoinGlass
Market Momentum Shows Signs of Strengthening
Beyond the immediate squeeze, broader market momentum metrics have turned constructive. Glassnode data shows the 14-day Relative Strength Index (RSI), a key indicator of buying and selling pressure, has recovered from a low near 30 on March 1st to 52 at the time of writing. “The rising RSI signals a modest improvement in BTC momentum and points to high buyer activity,” Glassnode stated in its Weekly Market Pulse report.
This shift in momentum is corroborated by a dramatic surge in on-chain spot trading volume. Volume climbed to over $9.3 billion from a low of $3.38 billion just days prior, an increase of more than 140%. This indicates a genuine resurgence in transactional activity and trader participation.
BTC 24-hour spot volume. Source: Glassnode
Institutional Demand Remains a Key Support
Perhaps the most consistent bullish signal continues to come from the U.S. spot Bitcoin ETF market. Net inflows for these products accelerated to $934 million in the latest weekly period, with daily trading volumes rising to $23.1 billion from $16 billion the week before. “The strength of inflows points to sustained institutional demand and continued traditional finance engagement,” Glassnode noted.
The trend persisted into the new week, with the ETFs attracting $167 million in net inflows on Monday alone. When viewed in the global context, all Bitcoin investment products logged $521 million in net inflows, contributing directly to the upward price momentum.
Spot Bitcoin ETFs weekly flows and trading volume. Source: Glassnode
Independent analyst CW8900 highlighted that “net buying” was occurring across major cryptocurrency exchanges, describing it as “a positive signal of actual buying demand.” This aligns with a broader narrative of capital rotation. As Cointelegraph has previously reported, the past 30 days have seen net positive inflows into Bitcoin ETFs juxtaposed with record outflows from gold ETFs, suggesting a potential shift of institutional capital from the traditional safe-haven asset into the digital one.
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