A sharp rally in Bitcoin—driven primarily by the unwinding of bearish derivatives positions—has propelled the broader crypto market higher, with the CoinDesk 20 Index gaining around 5%.

Bitcoin surged past $75,000 early Tuesday, reaching a high near $75,800 and decisively clearing a key resistance zone between $73,750 and $74,400. That range had capped upside moves multiple times since 2024, making the breakout a significant technical shift.

The advance appears to have been fueled by traders closing short positions built during February’s sell-off. Markus Thielen said heavy put selling around the $55,000 and $60,000 strike levels played a major role. With expiry approaching and prices well above those levels, traders increasingly saw those options as unlikely to finish in the money, prompting a wave of hedge unwinds.

Put options—contracts that allow traders to sell BTC at a fixed price—are typically used to hedge downside risk. During February’s decline, traders aggressively accumulated these positions as bitcoin briefly approached $60,000 on some exchanges. As sentiment improved, those hedges lost relevance, triggering a shift in positioning.

The unwinding of these bearish bets has also added fuel to the rally. As Markus Thielen explained, closing downside hedges reduces selling pressure and forces market makers to buy bitcoin to rebalance exposure, creating supportive flows that can push prices higher.

Analysts had previously pointed to the $75,000 level as a potential catalyst for accelerated gains due to these hedging dynamics. However, there has been little sign so far of strong call option demand, suggesting the move is being driven more by short covering than by fresh bullish positioning.

Bitcoin’s strength has spilled over into the broader market. Ethereum has gained nearly 8% to around $2,360, supported by rising demand for bullish options. XRP and Solana have climbed roughly 8% and 4%, respectively.

Other notable performers include Zcash, Pepe, Polkadot and Virtuals Protocol, which have also posted strong gains during the latest upswing.