Bitcoin surges on $650 million short squeeze, passing $76,000 as US inflation numbers fuels risk asset rally

Bitcoin climbed to its highest level since the early-February sell-off after US producer prices went up, but rose less than economists expected, in March, with easing oil prices and stronger equity markets adding to the rebound in risk assets.

According to CryptoSlate's data, Bitcoin surged past the $76,000 mark during early US trading hours, with the broader crypto ecosystem adding around $110 billion billion to its market capitalization during the last 24 hours.

The prevailing market optimism has been largely driven by shifting expectations regarding the Federal Reserve’s monetary policy, compounded by unexpected developments in ongoing geopolitical conflicts.

US equities surge as short sellers face historic squeeze

Meanwhile, the relief rally was not confined to the cryptocurrency sector alone.

Bull Theory, a macro-economics platform, noted that traditional financial markets absorbed the inflation data with equal enthusiasm, adding nearly $1.4 trillion in market capitalization to US indices over a two-day span.

According to the firm, the technology-heavy Nasdaq Composite leaped 2.85%, adding $960 billion in value, while the Russell 2000 index of small-cap stocks surged 3%. The S&P 500 advanced 2.12%, pushing it to within 100 points of a new historical benchmark.

Simultaneously, optimism regarding a stabilization in the Middle East drove a steep decline in global energy markets, with West Texas Intermediate (WTI) crude oil tumbling 6% to settle at $93 per barrel.

For bearish traders positioned against a digital asset recovery, the sudden influx of bullish momentum proved devastating. According to derivatives market data provider CoinGlass, the rapid appreciation in Bitcoin prices triggered a cascading wave of liquidations.

In a single one-hour window, over $100 million in leveraged positions were wiped out. Total market liquidations swiftly breached the $650 million mark, with short-sellers bearing the brunt of the damage.

Traders betting on price declines lost an estimated $514.94 million, marking the highest level of short liquidations recorded since the market volatility of February.

Against this backdrop, Joao Wedson, the CEO of blockchain analytical firm Alphractal, stated:

“Most of the bears were liquidated today! Exactly on April 14th, which is curiously a peculiar and fractal day for Bitcoin!”

Inflation numbers fuel hawkish pivot fears

The primary catalyst for Tuesday’s risk-on environment was the release of the March Producer Price Index (PPI) by the US Bureau of Labor Statistics. The data revealed that wholesale inflation is rising but below Wall Street's expectations.

According to the report, the headline PPI advanced 4% year-over-year in March, falling short of the consensus estimate of 4.7%.

Nonetheless, this represents a notable acceleration from the 3.6% annual increase recorded in February, and the highest annual growth rate in three years.

On a monthly basis, the PPI rose just 0.5%, matching February’s pace but coming in sharply below the 1.1% surge forecast by economists.

Core PPI, which strips out the volatile food and energy sectors, remained flat at 3.8% year-over-year, undercutting market expectations of 4.2%.

Market observers linked the rising inflation numbers to the US-Iran war, which drove up energy prices and rekindled fears of another inflation surge.

In macroeconomic environments characterized by sticky or accelerating inflation data, the Federal Reserve faces intensified pressure to maintain a restrictive, higher-for-longer interest rate regime.

As a result, market participants are forced to price out near-term rate cuts, betting instead that the central bank will maintain a hawkish stance and tighten monetary policy.

Historically, elevated borrowing costs drain liquidity from the broader financial system, disproportionately pressuring risk-sensitive assets such as Bitcoin and high-growth technology equities as capital rotates into yielding safe havens.

The changing narrative around Bitcoin’s role

Meanwhile, BTC's price rebound has also revived a deeper argument about the top crypto's place during periods of geopolitical stress.

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Bitwise Chief Investment Officer Matt Hougan said Bitcoin had outperformed many traditional assets since US and Israeli airstrikes began on Feb. 28. According to Hougan, Bitcoin was up 12% over that stretch, while the S&P 500 was down 1% and gold had fallen 10%.

That performance has challenged the view that Bitcoin should automatically trade lower during every geopolitical shock because of its reputation as a high-volatility risk asset.

Instead, some market participants increasingly see Bitcoin as carrying two overlapping roles. One is its more established function as a scarce digital asset that competes with gold and other stores of value.

The second is a more speculative role tied to its potential use in international settlement in a world where global payment systems are becoming more fragmented.

That second idea has gained traction since the West moved to cut major Russian banks off from the SWIFT network after Moscow’s invasion of Ukraine. The shift accelerated the search for alternatives to traditional dollar-based rails, particularly among countries looking to reduce exposure to Western financial pressure.

Against that backdrop, the Middle East conflict has fueled fresh debate over whether Bitcoin could benefit when geopolitical fractures deepen, and the appeal of politically neutral payment systems rises.

That argument remains contested, and it has not displaced Bitcoin’s sensitivity to rates, liquidity, and equity-market moves.

Still, it has become a more visible part of the market conversation whenever geopolitical stress intensifies.

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