Source: Cointelegraph
Original: “Cryptocurrency Market Sentiment Improves, But Weekend Liquidity Risks Remain”

Cryptocurrency investor sentiment has seen a significant rebound due to easing global tariff concerns, but analysts warn that structural weaknesses in the market may still trigger downward pressure during the weekend's liquidity shortages.

This week, following U.S. President Trump's more conciliatory tone, indicating that tariffs on Chinese goods could be "substantially reduced," the risk appetite among crypto investors appears to have improved.

However, analysts at the Bitfinex exchange told Cointelegraph that the improvement in sentiment "does not guarantee that Bitcoin will avoid volatility over the weekend": "The warming sentiment has reduced market fragility, but has not eliminated structural risks such as thin weekend liquidity."

The analysts added, "Historically, weekend markets remain prone to sharp fluctuations, especially when there is a high volume of open contracts and insufficient market depth."

They also noted that sudden macroeconomic news could still exacerbate market volatility during periods of low liquidity.

Over the past week, Bitcoin (BTC) had surged nearly 11%, but its upward momentum has previously been constrained by weekend liquidity dynamics.

Despite this, on April 4, when the U.S. stock market evaporated $3.5 trillion in market value due to Federal Reserve Chairman Jerome Powell warning that Trump's tariffs could impact the economy and raise inflation, Bitcoin briefly decoupled from the stock market.

Industry observers told Cointelegraph that the recent pullback was further amplified due to weekend liquidity shortages, as Bitcoin was the only large liquid asset available for risk-off operations at that time.

Marcin Kazmierczak, co-founder and COO of RedStone blockchain oracle company, stated, "While the improvement in sentiment creates a more stable foundation, the cryptocurrency market remains susceptible to rapid fluctuations during periods of reduced trading volume." He added in an interview with Cointelegraph, "The warming sentiment does provide some cushioning, but due to weekend liquidity constraints, traders should remain cautious, as price volatility can still be amplified regardless of market sentiment."

Cryptocurrency investors may have "priced in" tariff concerns

Aurelie Barthere, chief research analyst at the crypto intelligence platform Nansen, indicated that the crypto market may have fully accounted for tariff-related concerns: "It feels like the tariff panic has mostly been digested," she told Cointelegraph, adding, "While many are still uncertain about the market's trajectory over the next month or so, it seems the market is just waiting for a small signal indicating that we can re-enter."

Barthere further pointed out, "Whether this rebound can be sustained depends on the market's ability to break through previous resistance levels, at least from a standalone perspective. The rebound may have sustaining power because the market now seems to believe there is a 'Trump floor' behind the stock market, the dollar, and U.S. Treasuries." However, she also warned that the market may still experience more volatility during the upcoming tariff negotiations.

Nansen had previously predicted a 70% probability that the crypto market would bottom out and begin to recover before June, but also emphasized that the timing would ultimately depend on the outcome of the tariff negotiations.

Raoul Pal, founder and CEO of Global Macro Investor, noted that the U.S. tariff negotiations might merely be a "posturing" to reach a trade agreement with China, which could be the "grand prize" sought by the Trump administration.

Related: DeFi Development plans to raise $1 billion to boost investments in the Solana (SOL) ecosystem and expand its capital reserves.

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