Bitcoin eyes $85K in Q2 – Why BTC traders must watch THIS divergence

Halfway through Q2, the market is already pricing in end-of-quarter targets.  From a technical standpoint, Bitcoin’s [BTC] 10% move so far could just be the early leg of a setup similar to 2025, where Q2 closed with 30% gains. If we get a repeat of that structure, BTC could still be on track to finish Q2 somewhere in the $85k–$90k range. In that case, the $65k–$70k zone would likely stand out as a local bottom for this cycle.  The key question now is whether on-chain signals support that range as a potential local bottom. At the macro level, BTC started the week by breaking below the $75k level as uncertainty around the Strait of Hormuz picks up again, adding pressure to the “bottom is in” narrative. That pressure is now starting to show up in on-chain metrics as well. As the chart shows, BTC hasn’t yet seen full-blown capitulation. From a long-term holder perspective, only 28.89% are currently sitting in unrealized losses, a setup that has historically triggered panic once that figure moves into the 40-45% range, marking the start of an accumulation phase. Technically speaking, that suggests BTC may still have room for further downside before a bottom is in. And with macro FUD still around, that structure hasn’t really been invalidated yet. Moreover, derivatives are starting to look a bit stretched. Coinglass data shows BTC longs outnumber shorts by about 3:2, meaning the market is still leaning bullish on leverage. Put together, macro FUD, weak technicals, and crowded longs suggest the market is still vulnerable. With LTHs still underwater in parts of the move, capitulation risk isn’t off the table yet. That keeps the $65k–$70k range under pressure. Naturally, the question arises: Is the $85k–$90k Q2 target for Bitcoin too ambitious? Bitcoin faces bearish pressure, but strength persists Liquidity in a risk-off market can cut both ways depending on positioning. From a technical standpoint, stablecoin market cap just hit a new high at $320 billion, adding about $5 billion in a week. In a risk-off setup, that often means capital is parked on the sidelines as “dry powder." But with Bitcoin rallying 4.35% over the same period, liquidity looks like it’s rotating back into BTC rather than staying parked. Meanwhile, stablecoin dominance has dropped over 1%, printing four straight red candles and pulling back to early March levels, while BTC dominance has gained more than 1% in the same window. According to AMBCrypto, this growing divergence between stablecoin dominance and BTC dominance is worth watching. Historically, this kind of setup signals capital rotating out of defensive positioning and back into ‘risk,’ a structure that often supports continued upside momentum for Bitcoin.  In this context, rising BTC long leverage may actually reflect strategic positioning. The logic is simple: despite bearish pressure across multiple metrics, BTC dominance is rising while stablecoin dominance falls. At the same time, overall stablecoin liquidity continues to expand, suggesting capital may already be rotating back into Bitcoin. If this trend holds, BTC could move through the FUD, spark FOMO, and help establish a stronger bottom, making it a key trend to watch for Bitcoin’s Q2 outlook.  Final Summary Macro FUD, weak technicals, and crowded long positioning keep Bitcoin vulnerable, leaving the $65k–$70k range under pressure. Falling stablecoin dominance alongside rising BTC dominance could signal early upside momentum for Bitcoin’s Q2 outlook.