Bitcoin Traders Lost $762M in 72 Hours as Hormuz Headlines Reversed

Table of Contents Over one weekend, a single geopolitical story flipped twice — and cost crypto traders $762 million. On Friday, Iran announced it was reopening the Strait of Hormuz. Bitcoin jumped 4%. Traders who were betting against the price, known as shorts, were forced out of their positions. That wave alone cost short traders $593 million in liquidations. Then on Saturday, Iran reimposed controls on the Strait. Bitcoin reversed course. By Monday, the price had dropped to $74,335, and traders who had gone long were now under pressure. The unusual part of this story is that traders on both sides read the market correctly. Shorts knew the Friday rally probably wouldn’t hold. Longs expected a pullback after the reversal. Both were right about the direction. Both still got liquidated. “Shorts got wiped Friday on a rally they knew wouldn’t hold. Longs got squeezed Monday when it reversed exactly like they called it. Both sides read the market right. Both sides still got liquidated. At 25x, being correct doesn’t matter if maintenance margin fires first — and 4% is all it takes.”

— Anton Palovaara, founder at Leverage.Trading The reason comes down to leverage and a mechanism called maintenance margin. When traders use high leverage — in this case, 25x — exchanges require a minimum amount of equity in the account to keep a position open. That floor is the maintenance margin. At 25x leverage, a 4% move against a position is enough to breach that floor and trigger an automatic closure. The exchange doesn’t wait for the trader’s thesis to play out. Once equity hits the threshold, the position is closed. Bitcoin moved 4% in each direction over those 72 hours. That’s not an unusual move for Bitcoin — it’s close to a normal trading day. But at high leverage, normal volatility becomes a liquidation trigger. According to analysis from Leverage.Trading, the problem isn’t just the size of the move. It’s that the position has to survive the price action long enough for the trade idea to be proven right. If maintenance margin fires first, the direction call becomes irrelevant. To understand the numbers: on a 20x leveraged position, a trader might put up $480 in initial margin on a $9,600 position. The maintenance margin might be just $48. The buffer between those two figures is $432. Spread across the position, that puts the liquidation price roughly 4.5% from the entry point. At 50x leverage, that buffer shrinks to around 1.5%. Bitcoin can move that much in under an hour. Exchanges also use tiered systems that can raise maintenance margin requirements during volatile markets, sometimes with little notice. A position that looks safe can move toward liquidation even if the price hasn’t changed, simply because the exchange raised the bar. Funding fees on perpetual futures add another layer. These are charged every eight hours and deducted directly from position margin. Over two or three days, those fees alone can push a liquidation price closer, even in a flat market. The $762M in liquidations over this 72-hour period came from a news cycle that was visible and trackable. The Hormuz headline was public. The reversal was predictable. The leverage math, however, didn’t leave room for the trade to breathe. Bitcoin was trading at $74,335 as of Monday following the two-day whipsaw.