Bitcoin climbed to just under $75,000 on Tuesday, its highest level in four weeks, as optimism over a possible U.S.-Iran agreement triggered a wave of short liquidations across crypto markets. Total digital asset value rose to about $2.6 trillion, the strongest reading in a month.
Hundreds of millions in shorts wiped out
Data from CoinGlass showed roughly $530 million in leveraged crypto positions were liquidated over 24 hours, impacting about 177,000 traders. Around 80% of those losses, or about $425 million, came from short positions in Bitcoin and Ether closed during the most recent 12-hour window.
Analyst Bull Theory estimated that more than $300 billion in short liquidations helped add over $100 billion to overall crypto market capitalization. Derivatives activity indicated the surge was driven mainly by traders covering losing short positions rather than fresh buying.
Bitcoin and Ether hit multi-week highs
TradingView data showed Bitcoin briefly touching just below $75,000 before easing back to about $74,290 later in the session. Ether jumped 7.5% to around $2,380, a ten-week high and its firmest level since early February.
The gains pushed major tokens to their highest levels in weeks and shifted short-term market sentiment from caution to renewed risk appetite.
Geopolitics and ETF flows underpin mood
The price spike came against a backdrop of improving risk sentiment tied to reports of potential diplomatic progress between Washington and Tehran aimed at easing recent tensions in the Middle East.
Traders pointed to a combination of lower perceived geopolitical risk and renewed institutional demand through exchange-traded products as key drivers of the move in leading tokens.
BTSE Chief Operating Officer Mei said the rally reflected “growing expectations of a resolution between Washington and Tehran.” Reports indicated that Iran’s dependence on oil exports and a recent naval blockade in the Strait of Hormuz have increased pressure for a negotiated accord.
The U.S. administration began enforcing that blockade on Monday. President Trump warned that any Iranian vessels approaching U.S. positions would be destroyed, adding that any potential deal would seek to prevent Tehran from developing nuclear weapons.
Derivatives flip from bearish to bullish leverage
On derivatives platform Deribit, funding rates for perpetual swaps turned sharply positive, averaging around 0.05%. That shift means long position holders are now paying a premium to keep exposure, signalling that leverage is rebuilding on the long side after the short-driven liquidation cascade.
Open interest on major exchanges, which had dropped as positions were closed during the squeeze, is now climbing again. The build-up of new positions will likely determine the next direction for prices.
ETF flows rise, but still below peak levels
Market participants are watching spot exchange flows and U.S. exchange-traded fund activity for signs of lasting demand. Initial figures showed combined net inflows of about $150 million into U.S.-based crypto ETFs on Monday. While this marks a clear uptick, it remains below the daily levels seen in late February.
Analysts say sustained strength in these flows would be needed to confirm that the latest price action is supported by organic buying rather than just forced covering.
Rally driven by forced covering, not long-term holders
The structure of the move has raised questions about its durability. Because the rally originated primarily from the forced closure of bearish positions, rather than broad-based accumulation, some see the current price zone as lacking firm support.
On-chain analytics firm CryptoQuant reported that the supply held by addresses known for accumulating and rarely selling has not declined. This suggests long-term holders did not use the surge to take significant profits, and the rally was not accompanied by large-scale distribution.
What traders are watching next
In the near term, attention will focus on whether the derivatives-led squeeze can evolve into sustained spot demand:
- Spot buying: Continued inflows to exchanges and ETFs could help establish a more stable price floor.
- Geopolitical headlines: Any setback in talks between the U.S. and Iran, or an escalation in the Strait of Hormuz, could quickly reverse the optimism that fueled the short covering.
- Leverage build-up: Rising open interest and positive funding rates point to growing bullish leverage, which can amplify both upside and downside in coming sessions.
Together, Bitcoin’s upward momentum, derivatives-driven liquidations and shifting geopolitical expectations have pushed crypto markets to their highest levels in weeks, while leaving open the question of how solid this new ground will prove to be.
Want to understand how macro events shape crypto prices? Dive deeper with our guide on Bitcoin volatility and macro trends.
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