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Just days after reaching a new all-time high crypto Last Friday, the market suffered the largest liquidation in its history. In the span of a few hours, half a trillion dollars was wiped off the market Bitcoin A single post on social media is causing losses worth more than $200 billion.
The sell-off began when Donald Trump announced on Truth Social that the US would impose new 100 percent tariffs on Chinese imports from November 1. The US President’s threat came in response to Chinese controls on rare earth minerals, sparking widespread market panic amid fears of an escalating trade war between the world’s two largest economies.
More than 1.6 million traders were hit by the chaos as all top cryptocurrencies plunged in value, according to data from crypto analytics firm Coinglass. Trump’s own meme coin dropped nearly 40 percent of its value to a new low of $4.65, leaving thousands of his followers wondering about the losses from the crypto token that was once worth $45.
Panic spread online that the sudden collapse would lead to a long-term downward trend, as seen last price cycleHowever, another post by Trump appeared to calm such fears. Over the weekend, the US President scaled back his threat to impose tariffs on China, claiming “It’s all going to be OK… The United States wants to help China, not hurt it”.
Financial markets subsequently rallied, with Bitcoin falling back from $103,000 to nearly $112,000 by Tuesday – still a long way from the high it hit a week earlier.
It is still unclear whether Trump plans to impose any new tariffs on China, and industry experts have said the short-term market trajectory will depend on whether the dispute is resolved in the next few weeks or so.
“Over $19 billion of perpetual futures crypto positions were liquidated across centralized exchanges and decentralized market venues, the largest single-day liquidation ever in crypto history,” Simon Peters, crypto analyst at online trading platform eToro, wrote in a research note on Monday.
“Now with a glimmer of light that Trump may not follow through on tariff increases on China, crypto markets are on track to recover from Friday’s losses. No doubt all eyes will be on Trump’s Truth Social account this week for any positive updates or developments to encourage more investors to return to the market.”
This is not the first time that Trump’s comments have caused such a serious change in market sentiment. Billing himself as the first “crypto president” during his 2024 presidential campaign, he promised to establish a Bitcoin treasury, bringing all cryptocurrency Mining operations in the US, and protecting the crypto industry from strict regulation.
Bitcoin reached a record high at the time of its January inauguration, but declined in the following months due to a perceived lack of action in the sector. There was a brief surge in prices in preparation for the first-ever White House crypto summit, but it was not enough to reverse the downward trend, which was further exacerbated by his ‘Liberation Day’ tariffs in April.
The price swings, felt even more strongly by meme coins and smaller crypto tokens, highlight the fragility of the nascent space. Shawn Young, chief market analyst at MEXC, described the latest loss as a “wake-up call” for traders and investors, though said Bitcoin’s lack of relative movement compared to less established cryptocurrencies suggests it is more resilient to risk sentiment.
Describing the liquidation event as a ‘Great Reset’, he warned that the latest relief rally could still fall victim to the president’s whims.
“Reduced trade frictions between the US and China have been an important catalyst in stabilizing global risk sentiment,” Mr Young said. Independent,
“The market is digesting the low likelihood of an extended trade war and view Trump’s actions as steps to encourage negotiations. However, further action cannot be ruled out unless a counter-announcement is made regarding reversal of the planned tariff increases on Chinese imports.”