Bitcoin surged past the $78,000 mark on Thursday, hitting an intraday high of $78,348 on Bitstamp — its highest level since February 4. The rally was triggered by Iran's announcement that the Strait of Hormuz is now “fully open” for the remainder of the ceasefire, a major geopolitical shift that alleviated concerns over global energy supply and ignited a relief rally across both crypto and traditional markets.
The 24-hour gain for Bitcoin reached 4.1%, pushing its total market capitalization to approximately $1.56 trillion. Since the start of April, Bitcoin has gained more than 14%, and since the outbreak of the Middle East conflict, it has risen over 20%. For most of February, the leading cryptocurrency had been trading in a narrow range, struggling to break above the psychological $70,000 resistance level.
Geopolitical Breakthrough Fuels Risk-On Sentiment
The catalysts for this rally have been building for weeks. Reports of diplomatic progress between Washington and Tehran culminated in a ceasefire between Israel and Lebanon — a key concession Iran's negotiators had long sought — and paved the way for a broader U.S.-Iran agreement. The reopening of the Strait of Hormuz, a critical chokepoint for global oil shipments, was the final piece that sent markets soaring.
Oil prices crashed immediately on the news. Brent crude fell from around $100 per barrel to below $89, while West Texas Intermediate (WTI) dropped to $83 per barrel. The plunge in energy costs removed a major source of inflation anxiety, providing oxygen for a broad-based equity rally. European indices rose in tandem, and the S&P 500 — which had crossed the 7,000 milestone just a day earlier — continued its record-breaking run, closing 102 points (roughly 1.5%) higher at 7,143.79.
Short Sellers Face $810 Million Liquidation Bloodbath
The sudden surge in Bitcoin and the broader crypto market proved catastrophic for short sellers. According to Coinglass data, over $810 million in leveraged positions were liquidated across all crypto assets in the past 24 hours. Short positions accounted for nearly 95% of that total. Bitcoin alone saw $358 million in short liquidations, with $273 million wiped out in just four hours. Ethereum and other major altcoins also experienced significant short squeezes.
The scale of the liquidation was reminiscent of a gamma squeeze: as Bitcoin powered higher, margin calls forced shorts to buy back at higher prices, further accelerating the rally. The total amount of liquidated short positions on Bitcoin represented nearly all of the $380 million in over-leveraged positions that disappeared in the 24-hour window.
Fragile Truce: Will the Rally Hold?
Despite the market's euphoria, analysts caution that the underlying geopolitical tensions are far from resolved. The Trump administration has insisted on maintaining a naval blockade of vessels entering and exiting the Strait of Hormuz — a condition that Iran’s Islamic Revolutionary Guard Corps (IRGC) has already denounced as a violation of the ceasefire. Reports indicate the IRGC is preparing to respond if the blockade continues, which could quickly undo the fragile agreement.
Thus, while the relief rally has propelled Bitcoin back to levels not seen since early February, the sustainability of these gains remains uncertain. Investors will need to monitor developments in the Middle East closely, as any re-escalation could trigger a sharp reversal. For now, the market is pricing in a period of reduced geopolitical risk, but the situation on the ground remains fluid.
The broader implications for the crypto market are significant: if the truce holds and oil prices remain subdued, the decreased inflation pressure could encourage the Federal Reserve to adopt a more dovish stance, further supporting risk assets. Conversely, a breakdown in negotiations could send Bitcoin crashing back below $70,000. The next few days will be critical.