Cryptocurrencies rallied on Wednesday, with Bitcoin (BTC) climbing 3% to near $79,000 as markets priced in a potential de-escalation of the conflict between the US and Iran, sparking a short squeeze.
The move caught many leveraged traders off-guard, with Coinglass data showing 100,948 traders were liquidated for a total of $448.03 million in the past 24 hours. The majority of the liquidations were from short positions betting on further price declines, indicating the market was caught by surprise by the positive geopolitical headlines.
Major cryptocurrencies saw similar gains as of 15:09 UTC. Bitcoin was trading at $78,815, up 3.1% on the day, while Ethereum (ETH) rose 3.2% to $2,392. Other major altcoins, including XRP and Dogecoin (DOGE), posted gains of 3.5% and 3.3% to trade at $1.45 and $0.09735, respectively. The gains came after reports that US President Donald Trump was extending a ceasefire with Iran at the request of Pakistan.
However, the rally remains fragile, as the situation in the Middle East is uncertain. While some reports suggest the US may be willing to ease its naval blockade, US Treasury Secretary Scott Bessent stated the Navy would continue its enforcement. This suggests the risk of a rapid reversal remains high if negotiations falter. For Bitcoin, the key immediate resistance level is the psychological $80,000 mark, while initial support lies near the $75,000 zone.
The positive sentiment in the crypto space contrasts with more cautious trading in traditional currency markets. The US Dollar's recent rebound has been restrained, partly due to the perception of low conflict risk and also due to the dovish outlook of Federal Reserve Chair nominee Kevin Warsh. Warsh's belief in the disinflationary effects of artificial intelligence may lead him to favor rate cuts, a move that would typically benefit risk assets like cryptocurrencies by lowering the appeal of government bonds.
This article is for informational purposes only and does not constitute investment advice.
