BTC Fakeouts Wipe Traders on US Holiday Amid Low Volume

BTC Price Liquidity Squeezes Shake Out Traders

Bitcoin experienced significant volatility during the recent US public holiday, known as Presidents’ Day, when Wall Street markets were closed. This led to thinner order books across trading platforms, making it simpler for large-volume participants to manipulate short-term price movements. As a result, the cryptocurrency saw sharp swings within a relatively tight price range, peaking momentarily at $70,000 before reversing course. These abrupt shifts created multiple liquidity squeezes that affected traders holding both long and short positions, resulting in substantial liquidations.

Market data highlighted how Bitcoin’s price action played out over low-volume periods, with rapid spikes and drops catching many participants off guard. The reduced trading activity typical of holidays amplified these effects, as fewer orders meant that even moderate-sized trades could push prices significantly. This environment fostered what analysts describe as classic liquidity traps, where price movements clear out stops on either side of the current range before stabilizing.

BTC/USD one-hour chart illustrating intraday price swings. Source: TradingView

According to liquidation tracking platforms, approximately $120 million worth of cryptocurrency positions were wiped out in just four hours leading up to the report. This included clusters of buy and sell orders being systematically cleared, often followed by the rapid placement of new order walls just above or below the prevailing price levels. Such tactics intensified the downward momentum during pullbacks, exacerbating losses for leveraged traders who were positioned for continuation of the prior trend.

Bitcoin liquidation heatmap revealing concentrated wipeouts. Source: CoinGlass

Market observers noted that volatility levels had spiked considerably, a pattern echoed across various global asset classes in recent sessions. One trader remarked that the current environment lacks the usual calm associated with traditional low-activity periods, pointing instead to heightened uncertainty worldwide. This observation underscores how interconnected financial markets have become, with crypto particularly sensitive to shifts in liquidity during off-hours for major institutions.

Chart of Bitcoin’s historical volatility trends. Source: Independent trader analysis

Trading analysts characterized the session’s price behavior as a series of “breakouts and shakeouts,” where apparent trend breaks lure traders into positions only to reverse sharply. Detailed order book data from major exchanges like Binance revealed unusual whale activity coinciding with these liquidity hunts, particularly on the BTC/USDT perpetual futures pair. These large players appeared to target areas of clustered stops, systematically eliminating both bullish and bearish bets.

BTC/USDT order-book liquidity map with overlaid whale volume indicators. Source: Trading resource

Despite the aggressive short-term manipulations, some traders pointed out improving buying interest compared to the preceding weekend. This uptick in support was evident across most platforms, though one notable exchange showed weaker accumulation. Overall, Bitcoin managed to round-trip its gains, returning to levels around $66,800–$66,900 after the initial surge, confining the bulk of action to a narrow band amid the holiday-induced thin markets.

Bitcoin RSI Teases “Once per Cycle Lows”

On a broader timeframe, analysts continue to draw parallels between current Bitcoin dynamics and the prolonged bear market of 2022. Technical indicators, particularly the weekly Relative Strength Index (RSI), are flashing signals reminiscent of that downturn’s key phases. This metric, which measures momentum and overbought/oversold conditions, has dipped toward levels historically associated with cycle bottoms.

One prominent voice in the trading community highlighted how the weekly RSI is approaching what has traditionally been labeled as “once per cycle lows” in oversold territory. During past instances in 2015 and 2018, similar readings marked definitive bottoms. In 2022, however, it preceded a five-month consolidation period before a true macro low formed. This pattern suggests caution, as history may not repeat exactly but offers valuable context for potential basing action.

BTC/USD weekly timeframe chart featuring RSI overlay. Source: Market analyst

As of Monday, the weekly RSI stood at 27.8, the lowest since June 2022. Conventionally, readings below 30 signal oversold conditions, often preceding rebounds or at least pauses in downtrends. The analyst emphasized that while exact replications are unlikely, monitoring these alignments and divergences remains crucial for refining price forecasts and positioning strategies.

These developments occur against a backdrop of ongoing market uncertainty, where short-term liquidity games coexist with longer-term technical setups. Traders are advised to remain vigilant, conducting thorough due diligence as volatility persists. The combination of holiday-induced squeezes and bear-market echoes underscores the high-risk nature of current positioning in Bitcoin and the broader crypto ecosystem.