Cryptocurrency market sees record liquidations, triggered by latest Trump tariffs
News Summary
The cryptocurrency market has experienced "the largest liquidation event in crypto history" following Bitcoin's fresh all-time high, with volatility largely triggered by US President Donald Trump's latest round of tariffs. Crypto prices tumbled on Friday after Trump announced an additional 100 percent tariff on China and export controls on software. Bitcoin plummeted more than 12 percent, falling below US$113,000 after reaching an earlier all-time high of over US$125,000. According to Coinglass data, over US$19 billion in bets were wiped out and more than 1.6 million traders liquidated in the past 24 hours, with over US$7 billion of those positions sold in less than one hour on Friday. Brian Strugats, head trader at Multicoin Capital, stated that the focus now shifts to counterparty exposure and whether this triggers broader market contagion, with some estimates placing total liquidations above US$30 billion.
Background
The cryptocurrency market is known for its high volatility and susceptibility to macroeconomic events, regulatory news, and geopolitical developments. As a highly leveraged asset class, drastic price movements often trigger cascading liquidations, where brokers forcibly close positions to cover margin losses. US President Donald Trump's policies, particularly in trade and technology, have historically caused global market volatility. His administration has consistently pursued an "America First" economic agenda through measures like tariffs and export controls. The announcement of such policies, especially following his re-election in 2024, is viewed by markets as having significant impact.
In-Depth AI Insights
How profound is the indirect impact of the Trump administration's policies on the cryptocurrency market? - This liquidation event highlights the growing systemic risk of geopolitical and trade policies on seemingly unrelated asset classes like cryptocurrencies. - Trump's tariffs, while aimed at traditional trade relationships, inadvertently triggered a cascade in the highly leveraged crypto market, indicating that global interconnectedness transcends traditional market boundaries. This could reflect market participants interpreting it as a broader de-risking signal or anticipating shifts in dollar liquidity due to trade tensions. Does this massive liquidation event foreshadow an acceleration of digital asset regulation? - Market turmoil and investor losses of this magnitude are likely to provide fresh impetus for global regulators to tighten rules around cryptocurrency exchanges and leveraged trading. - Given the Trump administration's historical caution towards digital assets, this event could be leveraged as evidence for the need for stronger consumer protections and market stability measures, potentially reshaping the operational landscape for crypto in the coming years. How might China's strategic position in the global digital economy evolve in response to these tariffs and export controls? - The US tariffs and software export controls targeting China are not only designed to curb China's technological advancement but may also accelerate China's drive to develop its independent digital ecosystem, including its digital currency and blockchain infrastructure. - In the long run, this could lead to a more bifurcated global digital economic landscape, where China seeks to establish dominance in a digital sphere driven by its own standards and technologies, reducing reliance on Western tech and potentially giving a new push to its digital yuan.