Bitcoin rose to its highest since an early February drop on the back of rising U.S. producer prices, but the gains were smaller than economists expected in March as easing oil prices and strong stock markets spurred a recovery in risk assets.
According to crypto slate Bitcoin soared above the $76,000 level in early U.S. trading, with the broader cryptocurrency ecosystem adding about $110 billion in market capitalization over the past 24 hours, data showed.
The widespread optimism in the market is primarily driven by changing expectations regarding the Federal Reserve’s monetary policy, which is further exacerbated by unexpected developments in the ongoing geopolitical conflict.
U.S. stocks soar as short sellers face historic squeeze
Meanwhile, relief rallies were not limited to just the crypto sector.
Macroeconomic platform Bull Theory noted that traditional financial markets absorbed the inflation data with similar enthusiasm, adding nearly $1.4 trillion in market capitalization to U.S. indexes in two days.
The tech-heavy Nasdaq Composite Index soared 2.85%, adding $960 billion in value, and the small-cap Russell 2000 index rose 3%, the company said. The S&P 500 index rose 2.12%, coming within 100 points of a new historic marker.
At the same time, optimism about stability in the Middle East caused global energy markets to plummet, with West Texas Intermediate (WTI) crude oil falling 6% to settle at $93 a barrel.
For bearish traders who are against the digital asset’s recovery, the sudden influx of bullish momentum has proven to be devastating. According to derivatives market data provider Coinglass, the rapid rise in Bitcoin prices has triggered a wave of cascading liquidations.
In just one hour, over $100 million in leveraged positions were wiped out. Total market liquidations quickly exceeded the $650 million mark, with short sellers bearing the brunt of the damage.
Traders who bet on the price to fall lost an estimated $514.94 million, the highest level of short sales since February, when market volatility increased.
Against this backdrop, Joanne Wesson, CEO of blockchain analysis firm Alpharaktal, said:
“Today, most of the bears liquidated! It’s April 14th. Oddly enough, this is a special and fractal day for Bitcoin!”
Inflation numbers fuel pivot fears among hawks
The main catalyst for Tuesday’s risk-on environment was the release of the March Producer Price Index (PPI) by the U.S. Bureau of Labor Statistics. The data revealed that overall inflation is rising, but lower than Wall Street expected.
According to the report, the headline PPI rose 4% year-on-year in March, missing the consensus estimate of 4.7%.
Nevertheless, this represents a notable acceleration from the 3.6% annual increase recorded in February, and is the highest annual increase in three years.
On a monthly basis, PPI rose just 0.5%, in line with February’s pace but well below the 1.1% rise expected by economists.
Core PPI, which excludes the volatile food and energy sectors, was flat year-on-year at 3.8%, below market expectations of 4.2%.
Market players linked the rise in inflation to the war between the United States and Iran, sending energy prices soaring and reigniting fears that inflation could spike again.
In a macroeconomic environment characterized by persistent and accelerating inflation statistics, the Fed faces increasing pressure to maintain a restrictive and long-term high interest rate regime.
As a result, market participants are forced to price in near-term interest rate cuts and instead bet on central banks remaining hawkish and tightening monetary policy.
Historically, risk-sensitive assets such as Bitcoin and high-growth technology stocks have been disproportionately squeezed as rising borrowing costs drain liquidity from the broader financial system and rotate capital to safe havens.
Changing narrative around the role of Bitcoin
Meanwhile, BTC’s price rebound has also reignited a deeper debate about the position of the top cryptocurrency during times of geopolitical stress.
Bitwise Chief Investment Officer Matt Hogan said that Bitcoin has outperformed many traditional assets since the US and Israeli airstrikes began on February 28th. Hogan said Bitcoin is up 12% during that time, while the S&P 500 is down 1% and gold is down 10%.
This performance casts doubt on the notion that Bitcoin should automatically fall whenever a geopolitical shock occurs due to its reputation as a volatile, risky asset.
Rather, some market participants increasingly see Bitcoin serving two overlapping roles. One is that it is becoming more established as a rare digital asset that competes with gold and other stores of value.
The second is a more speculative role related to its potential use in international payments in a world where global payment systems are more fragmented.
This second idea has gained traction since Western countries moved to disconnect large Russian banks from the SWIFT network following Moscow’s invasion of Ukraine. This change has accelerated the search for alternatives to traditional dollar-based railways, especially among countries seeking to reduce their exposure to Western fiscal pressures.
Against this backdrop, the Middle East conflict has sparked a new debate about whether Bitcoin can benefit as geopolitical rifts deepen and the appeal of a politically neutral payment system increases.
This argument remains disputed, and Bitcoin remains sensitive to interest rates, liquidity, and stock market movements.
Yet, each time geopolitical stress intensifies, it becomes a more visible part of the market conversation.
(Tag translation) Bitcoin
