A wave of forced liquidations swept through the crypto markets on Tuesday, as traders who had bet on Bitcoin and Ether were caught off guard by a sharp price rise linked to hopes for a US-Iran policy. agreement.
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About 80% of the $530 million in total liquidations over 24 hours – about $425 million – came from short positions in the two largest cryptocurrencies.
Bitcoin reached just under $75,000 on CoinMarketCap, a level not seen in almost a month, before hitting heavy resistance and retreating to around $74,655. Ether made an even bigger move, climbing 7% to $2,378 – its highest since early February.
Geopolitical hope drives this movement
The rally came as markets began pricing in the possibility of a negotiated end to the weeks tension between Washington and Tehran. Jeff Mei, chief operating officer at crypto exchange BTSE, said traders believe the two sides are moving closer to an agreement.
Iran’s oil exports are crucial to its economy, and a American blockade of the Strait of Hormuz shipping lane could put heavy pressure on the country to come to the table.
“Now it appears Iran is frantically looking for a deal, and the stock and crypto markets are surging in response,” Mei said.
US President Donald Trump confirmed on Monday that a military blockade had begun. He threatened it eliminate all Iranian ships that come close. Trump also told reporters that Iran wants to reach a deal, but that his administration will not sign anything that would allow Tehran to develop nuclear weapons.
The broader crypto market climbed to a total value of $2.6 trillion – the highest in a month – as the news spread. According to the report, approximately 177,000 traders across markets were liquidated in a 24-hour period facts from CoinGlass.
Not everyone is convinced
The rapid price increase did not go uncontroversial. Valerius Labs, a market analyst, pushed back on the idea that this move represents a real recovery. “This is not an outbreak,” the company said. “It’s a short squeeze running into the overhead supply. Real buyers are showing up above the 200-day simple moving average, not 15% below.”
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Some analysts reported that more than $300 billion in cryptocurrency short positions were wiped out in just a few hours, adding more than $100 billion to the total market capitalization.
In addition to the short squeeze, other forces may also be at work. Reports indicate that institutional purchases through spot crypto exchange-traded funds, along with purchases by centralized exchanges, could add fuel to Bitcoin’s climb. Still, the rejection at $75,000 resistance kept the bulls from claiming a clean win.
Featured image from Getty Images, chart from TradingView