Key Insights:
- The total crypto market cap has recovered to above $2.4 trillion, driven by a fresh wave of demand.
- Top 20 coins pulled off a 12% plus gain in the last 24 hours, as prices finally pushed out of their consolidation zones.
- Trump’s threat of escalating the conflict with Iran could undermine the current recovery efforts.
The crypto market is currently going through one of its most exciting weeks in months. The bulls just made a strong comeback with momentum, thrusting most top coins out of the consolidation zones where they have been stuck for weeks.
This was the largest spike in bullish activity the crypto market has seen in months. The top 20 coins by market cap alone pulled off a 12% plus gain during the same period.
The bullish activity Triggered One Of The Largest Crypto Market Liquidation Events
While the spot ETFs were significant, a strong market reaction may also have been boosted by forced buying following heavy liquidations.
Wednesday marked the highest liquidation since 10 October last year. The crypto market today saw elevated short liquidations of $373 million, against $56.9 million in long liquidations.
Interestingly, this week’s massive liquidation event occurred because the market was already highly uncertain. Most traders anticipated more downside, hence the large short positions.
Consequently, the robust bullish momentum has wiped out the short sellers. However, the same kind of setup may be brewing, risking another major liquidation event.
US-Iran Escalation Risks Underscore Another Long Liquidation Event
The crypto market rally after months of consolidation may catalyze more bullish positioning. However, the bulls also risk a similar liquidation event, as the shorts did this week.
Similar efforts have previously yielded significant global destabilization, especially around the Strait of Hormuz. So why does this matter to the crypto market?
The largest crypto liquidation event occurred on 10 October 2025, when more than $19 billion in leveraged positions were liquidated. On that day, President Trump announced economic sanctions. The subsequent uncertainty led investors to pull their funds from the market, triggering heavy downside and massive liquidations.
This latest announcement may not necessarily cause the same scale of disruption as the sanctions. However, escalation threatens to subdue bullish sentiment and potentially cause another pivot.
Such an outcome risks potentially triggering another liquidation event, and this time the bulls might be in the crossfire. However, this will depend on how the market responds to news of the Iran-US escalation.
Institutional flows have been at the forefront of the latest rally. This means institutional reactions to macroeconomic news may determine how the crypto market responds. Whether the bulls will maintain dominance or whether the bears will jump back on top.
