Bitcoin holds $71K – But $800 mln in liquidations tell a bigger story

Market resilience really shows up during heavy deleveraging, which often sparks sudden swings. The recent volatility around U.S. President Donald Trump has played out clearly in Bitcoin’s [BTC] derivatives market.

For context, on the 22nd of March, President Trump issued a 48-hour ultimatum to Iran, rattling markets. The next day, he paused strikes on Iranian energy, and BTC ripped past $71k.

This sequence of events sparked a textbook liquidation cascade.

Traders lost a total of $813 million over two days, with $282 million in long positions wiped out on the 22nd of March and $531 million in short positions liquidated on the 23rd of March, which highlights the intensity of the short-side squeeze.

Source: CryptoQuant

The rapid shift in market sentiment was also reflected in the Long/Short Ratio. According to the report, the ratio flipped sharply from 6.7:1 long-heavy to 12.4:1 short-heavy in just 24 hours, showing how fast and intense the deleveraging was.

And yet, Bitcoin didn’t flinch. From a technical perspective, BTC is up nearly 5% on the week, reclaiming the $71k level.

Even after traders lost more than $800 million, BTC’s ability to hold around this key psychological level shows just how resilient the market remains and how well it absorbs big shocks.

Backing this view, CryptoQuant called this a “much-needed” setup to shake out weak hands, noting that traders had overextended Open Interest and crowded their positions, which gave Bitcoin room to reset and strengthen.

In this context, the question remains: Does this setup actually reinforce a BTC bottom, or was it just a short-lived bear trap?

Is Bitcoin luring traders into an illusion?

The “buy the fear” approach often drives Bitcoin’s local bottom thesis.

In simple terms, when smart money steps in on strength, it shows the market is absorbing selling pressure. Notably, the way BTC handled the recent $800 million liquidation event reinforces this setup. Moreover, traders seem to be positioning ahead of it, with whales adding leveraged long positions.

The bigger question, however, is whether this strength translates on-chain. According to a recent Santiment report, Bitcoin’s whale activity has become historically quiet.

On-chain metrics over the past week reflect this caution, showing just 6,417 daily $100k+ BTC transfers, the lowest since September 2023, and 1,485 daily $1 million+ BTC transfers, the lowest since October 2024.

Source: Santiment

Meanwhile, Bitcoin’s Coinbase Premium Index (CPI) continues to slide, pointing to weaker demand.

Taken together, these signals suggest that, despite recent price strength, on-chain activity hasn’t confirmed a broad-based rally, showing that the market is still digesting risk before making its next move.

According to AMBCrypto, this contradicts CryptoQuant’s view that the $800 million-plus deleveraging set up Bitcoin for higher levels.

Instead, whales are building long positions, but spot momentum remains weak, making BTC’s apparent strength feel more like an illusion. If demand doesn’t pick up soon, this setup could collapse into a bull trap, meaning any talk of a Bitcoin bottom is still premature and traders should remain cautious.

Final Summary

• _Bitcoin shows resilience despite $800 million+ liquidation. Price reclaimed $71k, but on-chain metrics and weak spot momentum suggest the rally may lack broad support. _
• Long positions are building, yet low transfer volumes and sliding CPI point to a potential illusion that could flip into a bull trap.