Virtual Assets, 180-Degree Reversal on Trump's Words... $200 Million Short Positions Liquidated

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An analysis suggests that the cryptocurrency market has shown an upward trend, with risk-on sentiment recovering amidst easing geopolitical tensions and changes in the macroeconomic environment.

BeInCrypto reported on May 4 (local time) that the cryptocurrency market rose by approximately 1.8%, expanding its total market capitalization to around $2.63 trillion.

According to the report, the key background for this surge is Donald Trump's announcement of ‘Project Freedom’. This measure was interpreted as easing military tensions in the Strait of Hormuz, triggering capital inflows into risk assets across the board, along with a drop in oil prices.

In particular, as geopolitical risk premiums decreased, a ‘risk-on’ trend strengthened in both stock and cryptocurrency markets, leading to capital flowing back into digital assets, according to the analysis.

Internal market factors also supported the rise. Bitcoin led the upward trend by breaking past $80,000, and in this process, approximately $285.51 million worth of short positions were liquidated, accelerating the pace of the rise.

From a technical perspective, the formation of a golden cross, where the 50-day moving average crossed above the 100-day moving average, was also cited as a positive factor, strengthening signals of institutional capital inflow. However, despite the upward trend, a ‘volume divergence’ was observed, where trading volume did not sufficiently accompany the rise, simultaneously raising caution signals about the sustainability of the short-term rally.

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