Bitcoin (BTC) rose above the $71,000 mark on Tuesday after U.S. President Donald Trump announced a two-week ceasefire with Iran, a move that eased geopolitical tensions and triggered a significant short squeeze in the crypto market.

"I agree to suspend the bombing and attack of Iran for a period of two weeks," Trump posted on Truth Social. The suspension is subject to "the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz." The announcement led to the liquidation of $196.7 million in short positions versus $77.1 million in longs over the past 24 hours, according to data from Coinglass.

The price of Bitcoin jumped approximately 3 percent to a high of $71,350 following the news, its highest level in over a week. The broad-based rally also lifted other major digital assets, with Ether (ETH) gaining 3.7 percent to trade at $2,130. The move pushed the total cryptocurrency market capitalization back above $2.5 trillion as traders priced in a lower global risk profile.

This event underscores Bitcoin's growing role as a macroeconomic and geopolitical bellwether, with its price now reacting swiftly to shifts in global risk sentiment. The rally's sustainability, however, depends entirely on whether the fragile ceasefire holds. Key overhead resistance for Bitcoin remains at the $71,500 and $81,200 levels, which have capped previous advances since the conflict began.

A Tale of Two Ceasefires

The ceasefire, which came just hours before a 48-hour deadline set by Trump was set to expire, was reportedly mediated by Pakistani officials. According to Trump's statement, the agreement was based on conversations with Pakistan's Prime Minister Shehbaz Sharif and Field Marshal Asim Munir. The U.S. President also referenced a "10-point proposal from Iran" that he believed was a "workable basis on which to negotiate."

However, Iran presented a starkly different interpretation of the events. The country's Supreme National Security Council stated it had accepted the ceasefire but rejected the conditions mentioned by Trump. A report from Mehr News Agency claimed Iran achieved a "historic victory by forcing the criminal US to accept its 10-point plan," which allegedly includes U.S. acceptance of Iran's control over the Strait of Hormuz and the removal of all sanctions. This conflicting narrative introduces significant uncertainty into the stability of the de-escalation.

Market Caught Off Guard

The sharp upward move in crypto markets suggests traders were positioned for further downside. Data from Santiment showed social media sentiment on Bitcoin was at its most bearish since the war began, creating ideal conditions for a short squeeze on any positive news. The rally was further supported by reports of increased ship traffic through the Strait of Hormuz, a critical chokepoint for global oil shipments, and a welcoming of the ceasefire by Iraq's Ministry of Foreign Affairs.

The situation highlights the increasing use of novel data sources for tracking geopolitical risk. Fabian Dori, Chief Investment Officer at Sygnum Bank, recently pointed out that prediction markets like Polymarket are becoming a "real-time radar" for traders, with betting odds on a U.S.-Iran escalation showing a direct correlation with Bitcoin price movements.

This article is for informational purposes only and does not constitute investment advice.