Trump's Tariff Comments Trigger Sharp Crypto Plunge, Undoing ‘Uptober Rally’

The cryptocurrency market’s much-anticipated “Uptober Rally” came to an abrupt halt following explosive remarks by former U.S. President Donald Trump regarding tariffs on China. Bitcoin (BTC), which had been riding a wave of optimism, experienced a dramatic crash, momentarily approaching the $100,000 mark. Within a single hour, leveraged crypto positions worth an astonishing $7 billion (approximately KRW 10 trillion) were liquidated.

Bitcoin's Plunge and Record Liquidations

On October 10th, Trump announced plans to impose a staggering 100% tariff on Chinese rare earth elements. The policy stems from his stated opposition to China's dominance in the critical minerals industry. Markets reacted sharply to the announcement, with the cryptocurrency sector hit particularly hard.

Bitcoin nosedived by over 12% immediately after Trump’s remarks, plummeting to $104,000—a sharp downturn from its all-time high of $126,000 recorded barely a week prior. This marked one of the steepest single-day declines for the leading digital asset in 2023.

Data from Coinglass, a prominent cryptocurrency analytics platform, revealed a total of $10 billion (approximately KRW 14.3 trillion) in liquidations over the past 24 hours. This event now stands as the largest liquidation event since the former president first hinted at tariff expansions earlier this year in April.

The fallout was not limited to Bitcoin. Altcoins bore the brunt of the selloff, with notable cryptocurrencies like XRP, Dogecoin (DOGE), and Cardano (ADA) experiencing declines of 19%, 27%, and 25%, respectively. Such widespread losses underscored the pervasive sense of uncertainty looming over the market.

Heightened Volatility Amid Renewed Trade Tensions

The resurgence of U.S.-China trade tensions has heightened the risk aversion dominating financial markets. Cryptocurrency traders and institutional players alike appear to be seeking refuge from assets perceived as speculative.

According to Ravi Doshi, Co-Head of Markets at FalconX, “The rekindled trade war has significantly increased demand for downside risk protection in the crypto derivatives market.” The rising tide of volatility has impacted not only the crypto sphere but also traditional financial markets.

Stocks and crude oil prices tumbled in the wake of Trump's tariff comments, reflecting broader concerns about global economic disruption. Meanwhile, safe-haven assets such as gold and U.S. Treasurys saw inflows, emphasizing a marked shift toward defensively positioned investments. This divergence highlighted the growing uncertainty clouding high-risk asset classes like cryptocurrencies.

Spotlight on the Upcoming Trump-Xi APEC Summit Meeting

As market anxiety deepens, attention is shifting toward the potential meeting between Donald Trump and Chinese President Xi Jinping during the forthcoming Asia-Pacific Economic Cooperation (APEC) Summit on Jeju Island later this month. While Trump initially downplayed the possibility of such a meeting in a social media post, he later suggested to White House reporters, “I’ll be heading to Jeju [APEC Summit], and there’s a chance I may meet with President Xi.”

The prospect of face-to-face dialogue between the two global leaders has fueled speculation about what could transpire at the summit, particularly concerning the ongoing trade dispute. Analysts are closely watching behind-the-scenes negotiations between U.S. and Chinese trade officials, given that meaningful progress on tariffs could stabilize jittery markets.

Broader Implications for Crypto and Risk Markets

The stakes are high as global markets, particularly cryptocurrencies, hinge on the outcome of these diplomatic developments. If tensions escalate further without resolution, the selloff in risk-sensitive assets such as Bitcoin and altcoins could intensify. On the other hand, any sign of progress or easing of trade restrictions could help restore confidence.

For now, the cryptocurrency market faces a challenging landscape shaped by geopolitical forces beyond its immediate ecosystem. The coming weeks, especially outcomes from the APEC Summit, may well determine the trajectory for Bitcoin and broader digital asset markets as they navigate an increasingly interconnected global economy.