Crypto market climbs back above $2.5T as $250M in short positions wiped out

The global crypto market cap rose back above the $2.5 trillion figure as geopolitical and macroeconomic concerns led to the wipeout of over $250 million in short positions that fueled crypto price gains.

According to data from CoinGecko, the total market cap of all cryptocurrencies combined rose 1.4% to $2.52 trillion on Friday, April 10. Bitcoin (BTC) rose over 3% to touch the $73,000 mark before paring off with some of its gains and settling at $72,000 at the time of writing. Ethereum (ETH) surged past $2,200 while other top 10 major crypto assets were also seen in the green territory.

The market rally began in late U.S. hours yesterday after news broke out that Iran was looking into accepting Bitcoin for oil cargo ships crossing the Strait of Hormuz.

The sudden uptick in crypto prices caught short sellers off guard, who were then forced to buy back assets, fueling the crypto market rally. Data from CoinGlass shows that over $250 million of short positions were liquidated in the past 24 hours, in comparison to $95 million in long positions.

Crypto ETFs also played a significant part in supporting market gains. Data compiled by SoSoValue shows that spot Bitcoin ETFs drew in $343 million in net inflows on Thursday, while their Ethereum counterparts drew in $85 million. Both of these investment products had recorded outflows over the past two days.

The crypto market also appeared to share the positive sentiment from Asian tech stocks such as Japan’s Nikkei 225, which rose 1.8% over the past day, alongside the Hang Seng and Shanghai Composite, which also posted notable gains.

Investors also seem to be rotating capital from traditional safe-haven assets such as gold and silver, which have given up some of their gains over the past day. Gold and Silver fell by 1% each, trading at $4,750 and $75.5 each at press time.

However, there remains a key concern that could potentially derail crypto prices again.

First, the stability of the ceasefire remains quite shaky as Iran has so far failed to comply with the specific terms of the agreement, having still maintained a military presence in the Strait of Hormuz area. U.S. President Donald Trump has threatened the regime to uphold its side of the deal or face strikes with full force from the American military. Meanwhile, the Iranian government continues to maintain a defiant stance.

Such geopolitical tensions could likely continue to trigger volatility, especially if no clearer diplomatic resolution is reached to end the war.

Second, recent U.S. economic data have pointed out that inflation has continued to remain stickier than expected. Data from the U.S. Bureau of Economic Analysis showed that the core PCE index rose by 0.4% on Thursday.

This inflationary pressure might force the Federal Reserve to maintain a hawkish stance and hence delay interest rate cuts, which generally hurts risk assets, including cryptocurrencies, by keeping borrowing costs elevated.