Bitcoin Bounces as Trump Hormuz Comments Trigger $400M Short Liquidations

Digital assets staged a comeback on April 17 when Donald J. Trump declared the Strait of Hormuz officially open for "full passage," essentially telling the world that oil tankers could resume their maritime commute without interruption. The crypto crowd took this as a signal that geopolitical fireworks were at least temporarily dampened, and promptly shuffled their portfolios accordingly. Apparently, when a certain New York real estate mogul says shipping lanes are A-OK, Bitcoin decides to remember it was supposed to be an inflation hedge after all.

In a post shared earlier in the day, Trump stated that the Strait of Hormuz is "completely open and ready for business," while noting that a naval blockade would remain in place as it pertains to Iran. The waterway serves as one of the world's most congested energy toll booths, processing a rather substantial portion of global oil traffic. Recent disruptions had markets sweating supply shock scenarios like someone who'd forgotten their homework deadline. Trump's remarks offered what traders viewed as a temporary reprieve, even if the underlying regional tensions remained about as comfortable as sitting in a room full of cornered cats.

The crypto market responded with the enthusiasm of a dog told it's going for a walk. Bitcoin climbed more than 4%, while Ethereum surged over 5%, with Solana and XRP joining the green parade as well. Market heatmaps looked like someone had spilled radioactive Kool-Aid across the entire sector, indicating a definitive pivot toward risk-on positioning among traders.

A rather aggressive wave of liquidations accompanied the price action, because apparently someone forgot to tell leveraged bears about the memo. Data revealed that over $400 million in short positions got forcibly retired within a short timeframe. Bitcoin bore the brunt of this clearing, accounting for more than $130 million in liquidations, while Ethereum contributed over $60 million. These liquidations typically occur when prices moon so quickly that anyone holding a short position gets margin-called into oblivion, creating a feedback loop that sends prices even higher in what traders unceremoniously labeled a short squeeze.