The Bitcoin market suffered its biggest single-day crash on Friday after US President Donald Trump announced that he would impose 100% tariffs on all imports from China.
The sudden escalation in trade tensions wiped out more than $5.3 billion in leveraged positions in the Bitcoin market and more than $19 billion in the broader digital asset market.
The selloff began early Friday morning after President Trump posted that he would introduce “massive new trade tariffs” and software export controls in response to China’s restrictions on rare earth minerals.
Markets around the world plummeted, with stocks, commodities and digital assets plummeting within hours.
According to CoinGlass, this volatility led to the largest liquidation event in the history of digital assets.
“In the past 24 hours, 1,618,240 traders were liquidated, bringing the total liquidation amount to $19.13 billion.” CoinGlass wrote about X, adding that the actual number is “likely much higher” due to reporting restrictions on exchanges like Binance.
Just a few days ago, Bitcoin hit an all-time high of over $125,000. However, prices plummeted after President Trump announced tariffs.
Bitcoin fell to $109,000 on Bitstamp Friday afternoon, with some exchanges reporting the price as low as $106,000, but by the evening it had stabilized around $112,000 — an 8% decline on the day.
Smaller altcoins were hit even harder. Some tokens lost 50% in an hour, others lost 60% in an instant. “Probably one of the most serious flashes of Alternative I’ve ever seen, and I never imagined Alternative would have this much impact.” Mr. Covey, a long-time trader, wrote about X. “(It) reminds me a little bit of summer 2021.”
Overall, the market capitalization of digital assets shrank by $560 billion in one day, from $4.3 trillion to $3.74 trillion, according to CoinGecko. Trading volume exceeded $500 billion as automated systems liquidated positions and removed traders from bets.
Analysts say excessive leverage made the crash worse than expected. CoinGlass estimates that $16.7 billion of the $19 billion in liquidations were long, meaning traders who had bet on the price rising were forced to sell as the market fell.
At least one whale was reportedly killed while millions of traders were affected.
On-chain data revealed that the individual held large short positions in Bitcoin and Ethereum just before President Trump’s announcement, making $190 million from the price crash. It’s time to start suspecting that everyone has inside information.
Friday’s selloff was not limited to digital assets. Stocks and oil fell sharply as investors fled to safe-haven assets such as gold and U.S. Treasuries.
Analysts said this highlights the relationship between digital assets and the global economy. “This highlights the macro connectivity of cryptocurrencies.” Vincent Liu, CIO of Kronos Research, said: “Volatility is expected, but watch for rebound signals in cleared markets.”
The tariff threat is the latest phase of the U.S.-China trade war, nearly 10 months into President Trump’s second term. In his post on Truth Social, he said the tariffs were in response to China’s restrictions on rare earth materials used in advanced technology.
This move directly targets the global AI and semiconductor industries, and everyone is concerned about prolonging the economic conflict.