Crypto Market Crashes Amid Trump's Tariff Comments: Record $19 Billion Liquidation Event

The cryptocurrency market witnessed an extraordinary collapse on the heels of former U.S. President Donald Trump’s announcement about steep tariff hikes on Chinese imports. Within just 24 hours, more than $19 billion in crypto positions were liquidated, marking the largest long liquidation event in crypto history and plunging investor sentiment deep into negative territory.

Unprecedented $19 Billion Liquidated in 24 Hours

Data from CoinGlass captures the historic scale of this sell-off, with $19.3 billion wiped out across crypto markets. Long positions accounted for a staggering $16.8 billion, comprising roughly 87% of the total liquidations. Bitcoin (BTC) and Ethereum (ETH) led the charge, with Bitcoin seeing $5.36 billion liquidated and Ethereum following at $4.42 billion.

Bitcoin’s price plummeted momentarily to $10,200—a level last seen in February—triggering widespread panic among market participants. Major exchanges, including Binance, experienced temporary disruptions such as limitations on trading activity, further exacerbating the chaos. The volatility even extended to stablecoins, as Tether (USDT), which is meant to maintain parity with the U.S. dollar at a 1:1 ratio, surged to 5,755 KRW on South Korea’s Bithumb exchange. This uncharacteristic spike signaled systemic strain across markets. Meanwhile, the “Kimchi Premium”—a metric measuring price discrepancies between Korean exchanges and global markets—soared to 13% before stabilizing at 7%.

Trump's Tariff Announcement Sparks Fear

The primary catalyst for the crash was Donald Trump’s announcement of a 100% tariff increase on all Chinese imports, set to go into effect on November 1. The former president’s comments came shortly after news broke that Trump had been passed over for the Nobel Peace Prize, adding a layer of unpredictability to his remarks. Trump also revealed plans to limit exports of critical software—a move understood as retaliation against China’s export controls on rare earth materials.

Speculation surrounding the fate of the U.S.-China summit, slated for later this month, added fuel to the fire. Concerns about geopolitical instability rippled across markets, sparking sell-offs not only in cryptocurrency but also in traditional financial sectors.

Comparing the Largest Liquidation Events

Crypto analysts were quick to highlight the sheer magnitude of the $19 billion liquidation. Veteran market observer Ash Crypto provided perspective on just how extreme the event was, comparing it to other major sell-offs in the sector's turbulent history.

• March 2020 COVID-19 Crash: $1.2 billion liquidated.
• FTX Collapse in November 2022: $1.6 billion liquidated.
• October 2023 Trump Tariff Trigger: $19.3 billion liquidated—a scale nearly 20 times larger than the COVID-19 crash.

“This is an unparalleled moment in crypto’s volatile history,” Ash Crypto tweeted, underscoring the seismic impact of the latest sell-off.

Uptober Turns Bleak Amid Investors’ Fear

October, traditionally nicknamed “Uptober” for its historically bullish trends in crypto markets, took a grim turn following the sell-off. The sudden collapse has wreaked havoc on sentiment indicators. Alternative's Fear & Greed Index—a widely tracked gauge of market emotions—plummeted from 54 (“Neutral”) to 35 (“Fear”) in less than a day. Lower scores on the index signal heightened selling pressure as fear grips investors, while higher scores typically indicate buying momentum.

"This liquidation event has shattered hopes of an 'Uptober' rally, leaving both retail traders and institutional investors deeply spooked," noted a prominent industry analyst.

What Lies Ahead for the Crypto Market?

As the industry grapples with this unprecedented liquidation event, questions surrounding crypto’s resilience abound. Geopolitical instability now looms large as a persistent threat to the sector’s performance, compounded by external financial pressures. Volatility appears poised to dominate the weeks ahead, with investors closely monitoring potential fallout from Trump's tariff plans and their broader economic ramifications.

While the crypto market has weathered severe crashes before, the scale and speed of the October sell-off serve as a sobering reminder of its vulnerability to global macroeconomic and political developments. The ability of digital assets to recover in the face of such headwinds remains a central concern for market participants worldwide.