Bitcoin's $2,000 Crash Wiped Out $601M in Longs After US-Iran Deal

Bitcoin dropped $2,000 in two hours Thursday after the U.S. and Iran signed a peace agreement, wiping out $601 million in long positions across crypto derivatives, exchange data show. Longs in Bitcoin alone accounted for $177 million of that total. Short positions lost $85.6 million, including $19 million in Bitcoin.

The selloff followed a failed test of $66,000 resistance at midday Wednesday. Bitcoin slid to $63,643 before midnight, stabilized near $64,340, then broke lower Thursday after a brief bounce attempt. The price fell from $64,500 to roughly $62,500 in two hours. The Crypto Fear & Greed index dropped to 15, in "extreme fear" territory.

The trigger was the official signing of a protocol between the American and Iranian presidents. Tankers are now sailing freely through the Strait of Hormuz, traders said. West Texas Intermediate crude fell below $74 a barrel, Brent below $77.

Capital rotated out of crypto into equities. The Nasdaq rose 1.71% and the S&P 500 gained 1.22%. In Asia, Japan's Nikkei climbed 1.65% and South Korea's Kospi crossed 9,000 points.

The liquidation cascade hit leveraged traders hardest. Margin positions on derivatives platforms triggered forced closures after the price broke below key support levels. The ratio of long to short liquidations – roughly 7-to-1 across all cryptos – reflects a market heavily positioned for a rally that did not materialize, data trackers said.

With the geopolitical risk premium removed, Bitcoin now trades on its liquidity fundamentals. The end of a major conflict can stabilize global macroeconomic policy. The short-term effect is a purge of excess leverage. Traders said corrections triggered by such events often clear the way for a sideways consolidation phase.