- Crypto market volatility heading into the weekend wiped out over $19 billion in traders’ positions.
- Analysts blame the shakedown on Trump’s latest tariff announcement against China.
The cryptocurrency market just had its highest 24-hour liquidation heading into the weekend. By the wee hours of Saturday (UTC), over $19.28 billion positions got wiped off, making up $16.8 billion longs and $2.49 billion shorts, based on Coinglass data. The wild ride brought down the sector’s market cap from around $4.2 trillion to $3.8 trillion.
In the same period, 1,659,328 trades were wrecked. Meanwhile, the highest single liquidation order occurred on the Hyperliquid (HYPE) decentralized perpetual exchange under an Ethereum (ETH) and US dollar (USD) pair valued at $203.36 million.
Along the way, market sentiment turned to “Fear” in Alternative.me’s Crypto Fear & Greed Index as the scale flipped to 27, a couple of points near the “Extreme Fear” territory. This marked a significant downturn from Friday’s “Greed” score of 64. Additionally, it was a huge drop from last week’s peak at 74, which was just a point short of going to “Extreme Greed.”
Why Exactly is the Crypto Market Down?
The volatility in the crypto market heavily impacted leveraged positions. As the initial selling pressure from spot markets built up, it eventually pushed leveraged futures and perpetual contract positions below their liquidation thresholds. The effect was immediate, causing their automatic, forced closure from exchanges.
However, most analysts attribute the primary cause of the fluctuation to President Donald Trump’s latest tariff bombshell. On Friday, the US imposed another 100% tariff on goods from China. This comes on top of the 30% duties it already enforced against the giant Asian nation. Many saw it as a major escalation of the trade tension between the Western and Eastern superpowers after months of a cooldown.
Trump also announced “export controls” starting next month on “all critical software.” The move came in response to President Xi Jinping’s sweeping restrictions on rare earth exports, which are crucial for the tech industry. The US president considered China’s position as “extraordinarily aggressive” and an “extremely hostile letter to the world.”
“The United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying,” Trump confirmed on Truth Social. “Also on November 1st, we will impose Export Controls on any and all critical software.”
Risk assets, particularly tech stocks, took a hit from the recent saber-rattling between the US and China. These consequently contributed to considerable losses in key indices.
Nasdaq fell by 3.6%, while Dow Jones and S&P 500 declined by 1.9% and 2.7%, respectively, at the heat of the moment. Nasdaq and S&P suffered their largest dips since April.
Bitcoin and Alts Take a Deep Dive
Bitcoin (BTC) and top market cap altcoins tend to follow risk assets in the short term, which led to the wipeout of a massive chunk of the crypto market. BTC notably fell to the $102K range briefly in some exchanges, such as Binance, upon Trump’s tariff announcement before a sharp rebound to $115K.
Despite the shakedown, experts like Cointelegraph Head of Markets Ray Salmond saw the dip as a discount for a lower entry point in the market before October’s “Uptober” vibes really kick off and more traditional finance (TradFi) institutions make their big announcements related to crypto assets. He also indicated that investors should wait until Monday for more clarity on Trump’s latest pronouncements.
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