A sharp move in the cryptocurrency market caught traders betting on a bitcoin decline off guard. After news from Washington, the price of BTC surged rapidly, leading to massive liquidations of short positions.
According to derivatives platforms, more than $530 million in shorts were liquidated in a day, and in just one hour, the liquidation volume exceeded $30 million.
The Market Turns Sharply Upward
Bitcoin has shown strong growth in recent hours and approached the $74,000 mark. At the time of publication, the price was holding around $73,400, which means an increase of about 9% in 12 hours.
The rally quickly spread to other assets. Ethereum added about 11% over the same period, increasing its market capitalization by about $26 billion. Bitcoin’s own capitalization grew by more than $120 billion in a day.
Short Traders Caught in a Liquidation Cascade
The sharp price increase triggered a classic short squeeze. When an asset’s value rises quickly, traders with short positions are forced to close trades by buying back the asset on the market.
These forced purchases further fuel the price increase. As a result, a cascade of liquidations forms, accelerating the upward movement. This is exactly the scenario that played out in the derivatives market after the news from the US.
White House Decision Was the Trigger
The catalyst for the move was a political development. The White House officially nominated Kevin Warsh for the position of Chair of the Federal Reserve. Warsh previously served as a Fed governor and is considered one of the economists who openly support the development of digital assets.
The official statement says he is nominated for a four-year term as Fed Chair, as well as for long-term membership on the Board of Governors. The market took this news as a potentially positive signal for the crypto industry.
The Gap Between Bitcoin and Gold Widens
Against the backdrop of rising cryptocurrencies, the price of the traditional safe-haven asset—gold—fell noticeably. Over the same period, the metal dropped by about 3%. This gap intensified the discussion about reallocating capital between classic and digital store-of-value instruments.
Analysts note that during periods of monetary policy changes, investors often reconsider the structure of their portfolios.
Politics Influences the Crypto Market Again
Recent moves show that the cryptocurrency market is increasingly reacting to macroeconomic signals and government decisions. Appointments at the Federal Reserve are traditionally viewed as an indicator of future US monetary policy.
Therefore, any change in the regulator’s leadership can affect investor expectations. If the market considers future Fed policy to be more favorable for digital assets, capital inflows into the sector may increase.
What This Means for the Market
The situation with liquidations shows how sensitive the cryptocurrency market remains to news. A large share of trading takes place through derivatives and leverage. Therefore, sharp price moves can quickly turn into an avalanche of liquidations.
In the short term, this increases volatility. But at the same time, such episodes often become fuel for powerful market rallies.
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