The crypto market rose 2.4% to $2.51 trillion on Friday primarily due to a shift in global risk sentiment following signals of potential de-escalation in the Middle East.
Summary
- Crypto prices rebounded on Friday after crude oil prices retreated following multi-year highs.
- A wave of short liquidations across leveraged markets and back-to-back inflows into major crypto ETFs also supported the recovery.
Bitcoin (BTC), the leading crypto asset by market cap, rallied nearly 4%, hitting close to the $72,000 mark. Ethereum (ETH) was up 4.3% over the past day, trading at $2,100 when writing. Other major crypto assets, such as BNB (BNB), XRP (XRP), Solana (SOL), and Dogecoin (DOGE), had also posted modest gains on the day.
It should be noted that today’s market rally was a standalone event as it detached from both the U.S. traditional stock indexes and tech stocks. The Dow Jones Industrial Average dropped by 739 points or 1.56% in U.S. trading hours, while tech-heavy stocks such as the S&P 500 and Nasdaq-100 fell by 103 and 431 points, respectively.
The crypto market rallied as Investor risk-on sentiment improved after oil prices dropped sharply across the globe. Notably, Brent crude oil fell over 7% today, easing immediate fears of inflation and providing a more favorable environment for digital assets.
Short liquidations mount
As crypto prices rallied, it caught short sellers off guard, triggering liquidations of these highly leveraged positions. Data from CoinGlass shows that nearly $246 million was liquidated from leveraged markets, with the majority coming from short positions.
The total crypto market open interest also rose 5.2% on Friday, signalling that investors were injecting fresh capital into the market.
ETF inflows and Coinbase premium
Inflows into spot ETF products have also supported the recent gains. According to data from SoSoValue, on Thursday, $53.87 had entered spot Bitcoin ETFs, which marks the fourth straight day of inflows for these funds. A similar trend was visible across their Ethereum counterparts, which have posted three back-to-back days of inflows.
At the same time, Coinbase Premium has also risen sharply over the past 24 hours, indicating that U.S. institutions are paying a premium over global prices to secure Bitcoin. Traders often view this as a strong bullish signal that institutional “smart money” is leading the current market charge.
Crypto market rallied following Trump’s recent comments
Crypto prices also benefited after U.S. President Donald Trump recently hinted that the ongoing war between the two countries may be coming to an end.
This seemed to have calmed investor fears of a prolonged war, which in turn sparked a risk-on sentiment among investors who have begun moving capital from safe havens back into risk assets like crypto.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
