Bitcoin tops $71,000 to lead a crypto rebound as $550 million in short positions get liquidated

Bitcoin held firm near $71,000 on Tuesday, extending its recent gains even as geopolitical tensions in the Middle East intensified, with the cryptocurrency continuing to outperform traditional safe-haven assets like gold.

The largest digital asset was up roughly 0.25% since midnight UTC and about 4% over the past 24 hours. The broader crypto market also moved higher, supported by strength in altcoins and a wave of short liquidations.

During Asian trading hours, AI-related tokens led gains. Bittensor and Fetch.ai rose 5.8% and 4.1%, respectively, following comments from Jensen Huang, who suggested that artificial general intelligence (AGI) has already been achieved—fueling renewed interest in the sector.

Geopolitics, however, remained the dominant macro driver. Fresh strikes in Tel Aviv and Lebanon kept markets on edge. Earlier, U.S. President Donald Trump said a 48-hour ultimatum tied to the Strait of Hormuz had been paused following “productive” talks with Iran, though Iranian officials dismissed the claim as false.

Oil prices hovered near $100 per barrel, while U.S. equity futures, including the Nasdaq 100 and S&P 500, edged lower by about 0.1%.

Despite the backdrop, crypto markets showed notable resilience. Bitcoin has outperformed gold since the conflict began, challenging the traditional safe-haven narrative.

Derivatives positioning points to cautious optimism

More than $550 million in leveraged crypto positions were liquidated over the past 24 hours, with short positions accounting for the bulk—highlighting a squeeze on bearish bets.

However, bitcoin’s 4% rally has not been accompanied by a rise in futures participation. Open interest across major BTC futures slipped to around 228,000 BTC from 229,000 BTC, with similar declines seen in ether, XRP, and solana markets.

Several altcoin futures—including DOGE, ADA, SUI, AVAX, LINK, and PAXG—recorded open interest drops of up to 10%, suggesting traders are reducing leverage even as prices rise.

At the same time, most tokens showed strong buying pressure, reflected in positive cumulative volume deltas. A few exceptions, such as CRO, XMR, and TON, posted weaker flows.

Funding rates for major perpetual futures remained positive, ranging between 5% and 10%, indicating a broadly bullish tilt.

On the options side, data from Deribit showed continued demand for protective put options in BTC and ETH, though the premium over calls narrowed to 5–6 volatility points from 8–10 earlier in the week—suggesting reduced downside hedging pressure.

Block trades also reflected a more neutral stance, with demand for BTC put condor strategies, while ETH flows were dominated by risk reversals.

Altcoins gain ground, but risks remain

Altcoins outperformed bitcoin in early trading, with tokens such as HYPE, OP, and CRV rising around 3% as traders rotated into higher-risk assets in anticipation of a broader breakout.

The CoinDesk 20 Index, which is more bitcoin-heavy, rose 0.3%, while the altcoin-focused CoinDesk 80 Index gained over 1%, pointing to improving sentiment across the sector.

Still, underlying risks persist—particularly in decentralized finance. The recent shutdown of Balancer Labs and a hack involving the Resolv stablecoin project have weighed on confidence. Some market participants also point to limited yield opportunities and elevated risks within DeFi protocols.

Meanwhile, the memecoin segment continues to lag. The CoinDesk Memecoin Index posted only a modest 0.1% gain, with several components declining between 3% and 5%.

Overall, while crypto markets are showing resilience and signs of improving sentiment, traders remain cautious amid ongoing geopolitical uncertainty and mixed signals from derivatives markets.