The crypto ecosystem witnessed an unparalleled bull run, where the total cryptocurrency market cap nearly hitting $3 trillion. What really kicked off this rally was Donald Trump’s announcement of a major trade deal. It released a tsunami of enthusiasm and goodwill throughout the crypto sphere. Bitcoin, the bellwether of the crypto market, soared above $99,000 during the early Asian trading session, reflecting the market's bullish response to the news.
This increase in price resulted in significant liquidations across the market. One gargantuan liquidation order on Binance for the BTCUSDC pair was worth $10.59 million. In the past 24 hours, an incredible 106,273 traders were liquidated, with total liquidations reaching $291.90 million. According to data provided by Coinglass, 71.43% of positions liquidated were leveraged short positions. This is indicative of just how badly the market crushed anyone that was shorting the price pump.
Trump's Trade Deal Announcement
Donald Trump's announcement of a major trade deal played a pivotal role in the crypto market's rally. Trump initially teased the announcement on his Truth Social account, stating that he would hold a news conference at 10:00 in Washington, DC (15:00 BST), to announce an agreement with representatives of a "big, and highly respected, country."
The big reveal was announced directly via Truth Social. It’s the first deal announced since Trump slapped tariffs on all of America’s trading partners. Though much of the trade deal still remains unknown, that was enough news to raise hopes on both cryptocurrency and traditional financial markets. As a result, the Asian equity markets cheered, with all trading significantly in the green on Thursday.
The upbeat mood around the new trade deal is probably a reflection of the new outlook for economic stability, maybe even growth. Trade deals often lead to greater business activity, which can boost investor confidence and encourage investment in various asset classes, including cryptocurrencies.
Bitcoin's Price Surge and Liquidations
Bitcoin's surge above $99,000 during the early Asian trading session is a testament to the crypto market's sensitivity to macroeconomic news. When Trump first announced news of the trade deal, markets cheered. Thus, the anti-inflation narrative pushed Bitcoin to all-time highs as buying pressure intensified.
This steep price surge led to massive liquidations as well, mostly among traders who had opened short leveraged trades. Within a day, traders were hit by a shocking $291.90 million liquidation. This underscores the grave dangers of using leverage in the extreme boom and bust of the crypto market.
As a result, an astounding 71.43% of short positions have been liquidated. This means a lot of traders were caught flat-footed when prices rocketed up. These speculators likely hoped to see Bitcoin’s price plummet. With the good news about the trade deal causing a quick turnaround, that meant a painful stop loss forcing them to cover the trade at a loss.
Market Outlook and Future Predictions
The cryptocurrency market's reaction to Donald Trump's trade deal highlights the increasing interconnectedness between the crypto world and traditional financial markets. Yet macroeconomic events, such as trade agreements, have an enormous impact on crypto prices. They do affect investor sentiment and thus drive market movements.
The implementation of the trade deal is still in the works. Yet the market’s first big thumbs-up indicates that investors are looking to it to improve economic growth and stability. How long this optimism is sustainable depends on the specificity of the agreement. It will further depend on how, in practice, it benefits the global economy.
While the rest of the market may have moved on, the cryptocurrency market will likely continue to react to macroeconomic news and developments. With increased regulation and enforcement coming down the pipes, investors need to closely watch these occurrences and weigh their influence on crypto prices. The recent wave of liquidations have spotlighted the risks associated with leveraged trading. They remind us of the vital importance of understanding and managing risk.
