BTC Holds $64K as $200M in Shorts Liquidated; Fear & Greed Exits 'Extreme' Zone

Crypto’s Tuesday session was a textbook short-squeeze disguised as a geopolitical trade. While stock markets celebrated a potential U.S.–Iran deal, the blockchain-native story was the $137 million in forced short covering that lifted BTC and ETH but left memecoins and altcoins trailing. The shift from Extreme Fear to Fear signals that a local bottom may be in, but the collapse in volume warns that genuine spot demand hasn’t returned yet.

A détente in Middle East tensions sparked a risk-on rally across traditional and digital asset markets on Tuesday, with leading cryptocurrencies Bitcoin and Ethereum posting modest gains while altcoins like XRP and Dogecoin slipped. The moves came as investors priced in the growing prospects of a U.S.–Iran peace agreement following weeks of military escalation, driving the S&P 500 and Dow Jones Industrial Average to all-time closing highs. Bitcoin oscillated between $63,000 and $64,500 before settling near $63,955, up 0.90% on the day, while Ethereum clung to the $1,800 handle with a 0.68% rise. In contrast, XRP and Dogecoin both shed 0.12%, reflecting a flight to quality within the crypto complex as traders rotated from riskier altcoins into top-tier assets.

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Bitcoin oscillated between $63,000 and $64,500 before settling near $63,955, up 0.90% on the day, while Ethereum clung to the $1,800 handle with a 0.68% rise.

The session’s most revealing signal came from the derivatives market: over $200 million in positions were liquidated in 24 hours, with bearish shorts accounting for $137 million of the total. Bitcoin’s open interest, meanwhile, fell 0.25% even as spot prices ticked higher—a classic indication of short sellers buying back their positions to cover losses. This forced covering amplified the upward momentum and hints that the recent wave of bearish speculation is unwinding. The Crypto Fear & Greed Index, which captures market sentiment through volatility, volume, and social media metrics, improved from ‘Extreme Fear’ to ‘Fear,’ still well below neutral but marking a significant psychological shift.

Equities tied to the digital-asset space posted outsized gains, with Strategy Inc. (MSTR) rising 2.94% and Bitmine Immersion Technologies (BMNR) jumping 3.90%. The broader stock market rally—the Dow surged 907 points—provided a powerful tailwind, reinforcing the narrative that cryptocurrencies are still closely correlated with risk-on equity indices. The global cryptocurrency market capitalization expanded 0.71% to $2.19 trillion, though trading volumes eased, suggesting the advance lacked aggressive new buying.