Bitcoin eases after 13% rally pushes crypto market past $3 trillion

Bitcoin ↘ 0.29% rocketed past $87,000 on Monday, touching $87,381 during the U.S. session — its highest level since late January — before easing to around $85,500 in early Asian trading on Tuesday. The move capped a 13% rally over four days, lifting the total cryptocurrency market capitalization back above $3 trillion for the first time since January.bloomberg+3

A Short Squeeze Did the Heavy Lifting

The rally's immediate engine was a massive wave of forced liquidations. More than $1 billion in leveraged crypto positions were closed out over 24 hours, with roughly $840 million — or 82% — belonging to short sellers, according to Coinglass data cited by CoinDesk. Some 135,000 traders were wiped out, and the single largest liquidation was a nearly $21 million Bitcoin position on Hyperliquid.coindesk

"It looks like mechanics before conviction. Bitcoin cleared the top of its September range into a dense band of short liquidation levels, and forced buying did the rest," said Rachael Lucas, an analyst at BTC Markets. She identified $84,000 as the level to hold "if this is a regime change rather than a short squeeze."bloomberg

Open interest in perpetual futures climbed to nearly $160 billion, its highest since late October, even as shorts were liquidated — a sign new leveraged positions are replacing old ones rather than traders stepping aside. Caleb Lin, a senior sales trader at QCP Group, cautioned that when "leverage outpaces spot prices," even a mild pullback could trigger cascading liquidations in the other direction.moomoo

Catalysts Beyond the Squeeze

Several macro and regulatory tailwinds converged to support the move. U.S. spot Bitcoin ETFs attracted nearly $1 billion in inflows on Monday, their largest single-day haul since October. The SEC last Thursday granted a five-year exemption allowing tokenized U.S. stocks to trade on blockchain platforms, boosting sentiment across crypto-linked equities. Coinbase ↘ 1.46% rose 3.5% and Strategy ↘ 0.03% gained 9.5%.cryptonews+2

Falling oil prices — with WTI crude dropping more than 2% below $90 a barrel amid reports Iran was willing to reopen the Strait of Hormuz — eased inflation fears and supported risk appetite broadly. The Nasdaq Composite closed at a record high on Monday. Strategy also resumed Bitcoin purchases for the first time in three weeks, buying 950 BTC for approximately $75.7 million, bringing its total holdings to 846,000 BTC.investing+2

Altcoins Rally, but Caution Lingers

The rally rippled across the market. Ethereum ↘ 0.35% climbed to a nearly 10-month high near $2,800, XRP ↘ 0.55% jumped more than 9%, and Dogecoin ↗ 0.81% surged roughly 15%. Pepe led meme coins with a 22% gain. The Crypto Fear & Greed Index swung to "Extreme Greed".thestreet+2

Yet Bitcoin remains well below its record of $126,000 set last October, and some observers urged caution. "The risk is that this is a macro liquidity trade wearing a crypto costume," said Rich Rosenblum, co-founder of crypto market maker GSR. "If so, a risk-assets wobble would put Bitcoin under significant pressure". On-chain analytics firm Santiment noted that bullish commentary had surged to its highest level since 2024, warning that "synchronized 'higher from here' confidence can develop near local tops".benzinga+1