The initial announcement of the Strait's reopening, coupled with claims from Donald Trump regarding Iran's nuclear programme, had previously propelled Bitcoin above $78,000. This surge triggered substantial short liquidations, totalling $762 million across the cryptocurrency market. Bitcoin alone accounted for approximately $382 million of these liquidations, with Ether contributing $167 million, as funding rates had been negative for several weeks.
Market analysts are closely monitoring the $76,000 to $78,000 price range, identifying it as a critical resistance level. A sustained breach of this area could pave the way for Bitcoin to target its yearly open at $94,000 and potentially its all-time high of $126,000. Other major digital assets also witnessed considerable weekly gains during this period of market volatility.
The sudden shift in Iran's stance on the Strait of Hormuz led to a rapid unwinding of these gains. Reports from two tanker owners confirmed that their vessels received radio transmissions from Iran, indicating the closure of the waterway. One supertanker even reported gunfire and was forced to abort its transit.
Iran's state news agency, Nour, stated that the Strait had been returned to "strict management and control by the armed forces." This decision was reportedly made in response to a US blockade of Iranian shipping, leading several oil tankers that had rushed towards the Strait on Friday to turn back. This event highlights the precarious geopolitical factors influencing global markets, including cryptocurrencies.
The initial rally on Friday resulted in a significant rout for short positions, with an estimated $590 million in liquidations. Bitcoin short positions were particularly affected, accounting for $381 million, followed by Ether shorts at $167 million. Shorts outnumbered long positions by nearly four to one, making it one of the most substantial short-heavy liquidation events since February. The market setup had been conducive to this for weeks, with negative funding rates on Bitcoin perpetuals indicating that short sellers were paying a premium to maintain their positions. The initial Hormuz reopening acted as a catalyst, flipping this dynamic.
Crude oil prices also reacted sharply to the news, dropping nearly 10% to $85.90 per barrel on the initial headline regarding the Strait's reopening. Bitcoin, simultaneously, broke above the $76,000-$78,000 resistance zone that had previously capped all rally attempts since the market crash on February 5th. However, much of this progress was undone by Saturday's events, reinforcing a familiar market pattern where geopolitical headlines drive significant shifts in asset prices, particularly within the crypto sphere.
