As of May 2025, the market has shown signs of a potential reversal across key assets like Bitcoin (BTC), Ethereum (ETH), and Sui (SUI). But is this the beginning of a rally or a well-disguised trap? Let's dive in.

A significant development occurred recently—a strong bullish engulfing candle appeared during a period of extreme bearish sentiment. This candle has led to a sudden shift in market psychology, with many traders quickly flipping their bias to the long side. While the price action may seem encouraging on the surface, our analysis suggests this could actually signal the early stages of a deeper correction.

Strategic Positioning

From a risk management perspective, it’s prudent to reassess our exposure. Here’s our strategy moving forward:

Exit existing long positions: The priority should be capital preservation. Lock in profits or minimize potential losses as the reversal unfolds.

Open hedge positions: Consider establishing hedges with limited long exposure while maintaining core short positions. This provides flexibility depending on how the market evolves.

Re-evaluate at key levels: We'll closely monitor Bitcoin’s price action around major support zones, particularly the $105,000 and $102,000 levels. If significant buying pressure emerges at these points, it may be time to unwind short positions and reenter the market cautiously.

Watching Macro Catalysts

This potential reversal is occurring in the context of broader macro developments, including trade policy updates like the Trump Tariffs and global liquidity shifts. These external factors may continue to weigh on market sentiment and should be incorporated into your risk model.

Conclusion

While the engulfing candle has sparked excitement, it’s critical not to get swept up in crowd sentiment. A contrarian, calculated approach could be the key to navigating this market phase successfully.

Stay tuned for further updates as we watch the price action unfold, particularly around key support zones.

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