Trump’s Iran pledge sparks Bitcoin short squeeze

Donald Trump’s May 20 pledge to end the Iran war triggered an initial liquidation cascade in crypto, wiping out roughly $184.59 million in short positions over 24 hours and producing upward pressure on Bitcoin. Bitcoin traded near $77,808 inside a falling channel that has held since May 6.

The price structure has been descending since May 6. An attempted break below the channel on May 18 saw immediate buying and a 2.82% rebound. Eight-hour candles show declining trading volume as price approaches the channel’s upper edge.

Most of the May 20 liquidations occurred in Bitcoin-USDT perpetual contracts. Data for that 24-hour period show the largest share of wiped positions concentrated in perpetual futures.

Joao Wedson, CEO of Alphractal, mapped roughly $9.35 billion in potential short liquidations stacked above the current price and about $12.73 billion in potential long liquidations below. Binance seven-day perpetual data show cumulative short liquidation leverage of about $2.16 billion versus $1.28 billion in long liquidation leverage, with short exposure about 1.7 times the long and clustered mostly above the market.

A price tick higher forces some short positions to close, which raises bids and can trigger further forced buying across leveraged perpetual contracts. That process can amplify upward moves quickly because leverage is concentrated in derivatives rather than spot markets.

On-chain data show long-term holders adding to supply. Glassnode’s Hodler Net Position Change rose from a net addition of 22,365 BTC on May 4 to 29,782 BTC by May 20, a 33.2% increase over a little more than two weeks.

Key technical levels point to where a broader liquidation cascade could begin. Bitcoin sits just above the 100-period exponential moving average at $77,685. Immediate resistance appears at the 20-period EMA of $77,911 and the 50-period EMA at $78,529. A clean push above the 50-period EMA opens a path to the falling channel’s upper trendline, near the 0.618 Fibonacci level at $80,889, about 4% above the current price. A breach of $80,889 would expose a concentrated short cluster between roughly $83,109 and $84,131 and a target near $83,914. On the downside, support rests near the 0.236 Fibonacci level at $77,864 and the channel low at $75,995; a break below $75,995 would put the 200-period EMA at $76,327 into focus.

In a May 20 post, Trump wrote: “We’re going to end that war very quickly. They want to make a deal so badly. They’re tired of this.” Lower oil prices, if they occur after an agreement, typically feed into lower headline inflation and then influence central bank policy, but those effects generally take days to weeks to appear in bond yields, equities and currency markets.

Market participants note that a breakout from the falling channel requires confirming volume. The current advance on declining eight-hour volume raises the possibility an attempted breakout could fail without sustained buying. The stacked short leverage above and accumulation by long-term holders below set the technical map for where forced liquidations could accelerate price moves.