Q2 has started with investors shifting positions as macro FUD continues to dictate sentiment.
After a bearish Q1, the big question is whether confidence in digital assets can hold. From a macro lens, the setup for a strong April bull run looks weak.
Polymarket data shows just a 14% chance of shipping through the Strait of Hormuz normalizing by month-end, while crude oil continues to trade near $112 per barrel.
This backdrop aligns with a recent Santiment report. As the chart below shows, discussions around the Iran-U.S. conflict currently rank first in social volume, highlighting rising macro-driven sentiment.
Naturally, the question becomes: With macro FUD dominating narratives, is Bitcoin’s [BTC] April rally now at risk?
Historically, Bitcoin has often rebounded strongly in Q2 after a weak Q1.
Last year, for example, Bitcoin declined 11.82% in Q1 before rallying nearly 30% in Q2, as markets absorbed the “Liberation Day” FUD tied to U.S. President Donald Trump’s shifting stance on tariff duties.
However, history also shows exceptions.
During the 2022 bear market, Bitcoin posted a mild 1.46% correction in Q1 and then plunged 56.2% in Q2, marking its worst quarterly performance of the year.
In this context, the key question is, will markets absorb the current FUD and spark another recovery, or is Bitcoin setting up for a deeper downside?
Either way, macro conditions continue to drive investor sentiment, meaning BTC’s April outlook now comes down to how markets position around the ongoing FUD. With markets increasingly pricing in risk, the 86% probability of “continued conflict” clearly remains front and center as a key signal for Q2.
Bitcoin starts Q2 on fragile footing
Bitcoin’s current technical setup shows clear signs that rising market FUD is not translating into FOMO.
On the chart, BTC has begun the quarter by slipping below the $70k level. Near-term support now sits around $65k, a zone that could act as a key reaction area for price.
For a local bottom to form, Bitcoin will therefore need strong bid support to absorb ongoing selling pressure and stabilize price action.
Importantly, timing also matters. The balance between supply in profit and supply in loss is now moving toward levels seen in bear market environments.
Currently, around 11.2 million BTC remain in profit, while approximately 8.2 million BTC are held at a loss, highlighting growing stress among market participants.
However, instead of triggering FOMO, persistent FUD appears to be steadily weakening market conviction.
Supporting this trend, a Glassnode report shows that Bitcoin sharks and whales (those holding between 0.1k and 10k BTC) are realizing losses at scale.
The 7-day SMA of realized loss now exceeds $200 million per day, reflecting capitulation behavior from larger entities and setting the stage for heightened near-term volatility.
Against this backdrop, the 86% probability of the ongoing Iran-U.S. conflict continuing beyond April keeps geopolitical risk front and center.
However, with this FUD eroding investor conviction rather than triggering aggressive dip-buying, the market is clearly treating the current environment as a bear phase.
As a result, the odds of a 2022-style Q2 rally for Bitcoin are increasing.
Final Summary
- Rising geopolitical risks and market uncertainty are weakening investor conviction, keeping Bitcoin on fragile footing.
- Whale losses and risk-off positioning highlight a bear-phase environment, which could increase the odds of a 2022-style Q2 rally.
