The crypto market plunged into chaos this weekend as former President Donald Trump’s proposed tariffs ignited inflation concerns, sparking a historic sell-off.
Bitcoin nosedived 13.9% to $91,242, while Ethereum plummeted 37% to $2,159, erasing $2.2 billion in leveraged positions—the largest single-day liquidation ever recorded.
Analysts link the crash to Trump’s Saturday announcement of 25% tariffs on Canadian and Mexican imports and 10% duties on Chinese goods, set to take effect Tuesday. Economists warn these measures could spike consumer costs, destabilising global trade. Consequently, investors fled risky assets, amplifying crypto’s downward spiral.
Meanwhile, the White House defended the tariffs as vital for border security and curbing fentanyl trafficking. Yet, markets reacted swiftly: within hours, Bitcoin futures traders saw $421 million liquidated, and Ethereum holders lost $528 million. “This isn’t just a correction – it’s a panic,” said one trader.
Altcoins Plunge 30% as Panic breaks out
Altcoins bore the brunt of the sell-off, with XRP and Dogecoin crashing 30% and Cardano tumbling 35%. Solana and Binance Coin each dropped 15%, mirroring broad-based carnage. The crypto market cap shrivelled 8% in 24 hours, erasing months of gains.
Analysts attribute the freefall to excessive leverage; as prices dipped, margin calls triggered a liquidation avalanche. “The system was a tinderbox,” noted CoinGlass data, revealing $1.87 billion in long positions wiped out versus $345 million in shorts.
Additionally, retail traders faced devastating losses. “Altcoins are bleeding faster than Bitcoin,” one analyst warned, comparing the crash to March 2020’s COVID-induced meltdown. Despite the turmoil, some see opportunity. “Quality projects will rebound,” argued a decentralised finance founder, urging investors to avoid impulsive trades.
Don’t Revenge Trade
Experts caution against emotional decision-making post-crash. “Trying to ‘revenge trade’ now is suicidal,” said a Stack Funds strategist, referencing traders temptation to recoup losses via leveraged bets. Data shows altcoin futures faced disproportionate liquidations, worsening the sell-off. Historically, such events precede prolonged volatility, and analysts urge patience. “This is a marathon, not a sprint,” emphasised Bitfinex’s lead analyst.
However, not all signals are grim. While Bitcoin’s fear-and-greed index hit “extreme fear,” derivatives markets show steady institutional interest. Open interest for Bitcoin futures remains above $30 billion, suggesting whales are holding firm. Still, traders face a precarious wait. “The next 48 hours will reveal if this is a blip or a bear trend,” warned CryptoQuant’s CEO.
Could a Weaker Dollar Fuel Bitcoin’s Next Rally?
Paradoxically, Trump’s tariffs might catalyse Bitcoin’s resurgence, argue some analysts. Jeff Park of Bitwise Asset Management notes tariffs could weaken the dollar, echoing the 1985 Plaza Accord that reduced dollar dominance. “A weaker greenback and lower rates would turbocharge Bitcoin,” Park stated, citing its appeal as an inflation hedge. The U.S. faces a Triffin Dilemma: maintaining dollar liquidity requires trade deficits, which tariffs may exacerbate.
Furthermore, global central banks, wary of dollar dependency, might diversify reserves into Bitcoin. Already, nations like El Salvador and Bhutan have embraced crypto. “Tariffs could accelerate a ‘Plaza Accord 2.0,’” Park added, envisioning Bitcoin surpassing $150,000 if inflation persists. Yet, short-term risks remain. “Volatility will linger until tariff impacts clarify,” cautioned a JPMorgan analyst.
Is This the End of Crypto’s Bull Run – or a Buying Opportunity?
The crash has split experts: some predict prolonged bearishness, while others spy a discount. “Macro uncertainty favours cash, not crypto,” warned a Goldman Sachs report. Conversely, ARK Invest’s Cathie Wood doubled down on her $1.5 million Bitcoin price target, citing ETF inflows and halving momentum. Retail investors appear divided—Coinbase reported mixed buy/sell activity, while derivatives traders increased put options.
Ultimately, Bitcoin’s recovery hinges on inflation trends and geopolitical outcomes. If tariffs ease, crypto could rebound sharply; if trade wars escalate, stagnation looms. “This is crypto’s stress test,” said a Fidelity strategist. “Survivors will thrive long-term.” For now, the market holds its breath.
Written By Fazal Ul Vahab C H
