The cryptocurrency market has staged a significant rally, with its total capitalization climbing back above the $2.5 trillion mark. This surge was fueled by a combination of geopolitical developments and a massive liquidation of short positions exceeding $250 million.
According to data from CoinGecko, the total market cap rose 1.4% to $2.52 trillion on April 10. The rally gained momentum in late U.S. hours on April 9 following reports that Iran was exploring the acceptance of Bitcoin for oil cargo shipments transiting the Strait of Hormuz. This news triggered a sharp price increase that caught short sellers off guard, forcing them to buy back assets and further accelerating the market's upward move.
Data from CoinGlass reveals over $250 million in short positions were liquidated in the past 24 hours, compared to $95 million in long positions. This liquidation event was a primary driver behind the price gains across major assets.
Bitcoin (BTC) rose over 3% to briefly touch the $73,000 level before settling around $72,000. The rally was supported by a rebound in spot Bitcoin ETF inflows, which saw a net $343 million on Thursday, according to SoSoValue. Ethereum (ETH) surged past $2,200, with its spot ETF products drawing $85 million in net inflows. Both ETF categories had experienced outflows in the preceding two days.
The positive sentiment extended beyond crypto, aligning with gains in Asian tech stocks. Japan's Nikkei 225 rose 1.8%, while the Hang Seng and Shanghai Composite also posted notable gains. Investors appeared to be rotating capital from traditional safe-havens, with gold and silver each falling by 1%.
However, underlying risks persist that could trigger renewed volatility. The geopolitical situation remains tense, with the ceasefire stability described as "shaky." Iran has reportedly failed to comply with specific agreement terms, maintaining a military presence in the Strait of Hormuz. U.S. President Donald Trump has threatened military action if Iran does not uphold its side of the deal.
Furthermore, stubborn U.S. inflation presents a macroeconomic headwind. Recent data showed the core PCE index rose by 0.4%, suggesting inflationary pressures may force the Federal Reserve to maintain a hawkish monetary policy and delay interest rate cuts, which typically hurts risk assets like cryptocurrencies.
