A two-week ceasefire with Iran announced by former U.S. President Donald Trump on April 7 was preceded by unusually large, directional bets on decentralized prediction and derivatives markets, according to on-chain data. The news, which reopened the Strait of Hormuz and sent oil prices lower, helped push Bitcoin (BTC) up 3% to over $69,000.
"The liquidation data tells the story of how the market was positioned," analysts at data provider Kaiko wrote in a note. Data from Coinglass shows that of the $273.8 million in total liquidations on April 6, shorts accounted for $196.7 million versus just $77.1 million in longs, indicating traders were heavily skewed bearish before the announcement.
Hours before the deal was made public, traders on the prediction market Polymarket placed significant wagers on a positive outcome for maritime passage, with the odds on the "Will the Strait of Hormuz be open by April 10?" market flipping positive. Simultaneously, perpetual futures on the decentralized exchange Hyperliquid saw a spike in long interest tied to assets sensitive to geopolitical risk, including Bitcoin and oil-linked derivatives. The largest single liquidation was a $10.17 million ETH-USDT short on Binance, per Coinglass data as of 08:00 UTC on April 8.
The incident highlights the growing role of on-chain markets in price discovery around major geopolitical events and is likely to increase scrutiny on the potential for insider trading. While the Bitcoin rally reclaimed the top of its five-week range, it remains contained within the $65,000 to $73,000 channel. The next key resistance level sits at $71,500, a level that corresponds to the Lower Band indicator tracked by multiple on-chain analysis firms.
The de-escalation provided a sharp contrast to the market's mood just days prior. Social media sentiment, tracked by Santiment, had reached its most bearish point since the conflict began, with five negative posts for every four positive ones. The subsequent short squeeze underscores a classic crypto market pattern where maximum bearishness often precedes a sharp rebound.
Whether the rally can break the recent range depends on the ceasefire holding. The deal's impact on easing inflation concerns could provide a tailwind for risk assets like Bitcoin, but the episode's lasting legacy may be the questions it raises about information advantages in decentralized markets.
This article is for informational purposes only and does not constitute investment advice.
