Crypto Market Collapse: Trade War Fears Trigger $2.2B Liquidations

The cryptocurrency market plunged sharply over the weekend, with Bitcoin crashing 7.3% to $93,800 and Ethereum plummeting 20% to $2,500. Analysts attributed the sell-off to President Donald Trump’s 25% tariffs on Canadian and Mexican imports and 10% duties on Chinese goods, sparking fears of a global trade war.
Canada and Mexico retaliated with counter-tariffs, while China pledged WTO litigation, amplifying market uncertainty. Bitcoin’s dominance surged to 61.5% as altcoins hemorrhaged value. Ethereum futures saw $600M liquidated, part of a broader $2.2B wipeout—the largest single-day liquidation event in crypto history.
Memecoins suffered most: Dogecoin fell 22%, Trump’s official token dropped 30%, and Solana-based assets crumbled 13-38%. Analysts like Bitget’s Ryan Lee warned Bitcoin could slide to $85,000 if $95,000 support fails, while Ethereum’s RSI hit oversold levels, testing critical supports at $2,359.
Trade War Fallout and Market Mechanics
Trump’s tariffs targeted energy, automotive, and agricultural imports, citing border security and opioid concerns. Markets interpreted the move as inflationary, pushing investors toward U.S. Treasuries and oil. Bitcoin initially held steady as a hedge but buckled under cascading liquidations.
“Crypto became the weekend’s risk proxy,” said Chris Weston of Pepperstone, noting traders dumped speculative assets first. Overleveraged longs accounted for 85% of the $1.87B in liquidations, with a single Binance ETH trade losing $25M.
Altcoin Carnage and Technical Breakdowns
XRP reversed all post-election gains, crashing 25% to $2.26, while Cardano’s ADA and Stellar’s XLM fell 27% and 19%, respectively. Solana broke below $200 despite $100M in exchange outflows signaling accumulation by whales.
Bitcoin’s dominance chart formed a rising wedge before breaking below 59.4%—a rejection here could extend the altcoin rout. Ethereum’s failure to hold $3,000 dashed hopes of a bullish wedge breakout, with analysts like SignalPlus’ Augustine Fan noting ETH now trades “like a risk-on altcoin without institutional inflows.”
Institutional Moves and Macro Pressures
Investors yanked $390M from crypto ETFs, accelerating the downturn. The Fed’s potential rate hikes loomed as tariff-induced inflation fears grew, with Bloomberg estimating U.S. tariffs now at 1940s levels.
Commentators framed the crash as market self-correction amid state intervention, echoing Trump’s Truth Social post: “Golden ages demand painful transitions.” Elliott Management warned of an “inevitable crypto collapse” fueled by political hype, while long-term bulls eyed Bitcoin’s historical 30% bull-market corrections.
Geopolitical Risks and Trader Strategies
Retail traders piled into stablecoins, spiking Tether’s volume 80% to $128B. Technical charts flagged Bitcoin’s double-top pattern and bearish RSI divergence, with critical supports at $92,000 and $87,000.
Ethereum’s MVRV score below 1.0 hinted at undervaluation, but breaking $3,303 resistance remains key for recovery. “Markets are in full risk-off mode,” Fan added, urging caution ahead of U.S. equity opens.
Long-Term Divergence
While short-term volatility dominates, analysts diverged on Bitcoin’s trajectory. Bitwise’s Jeff Park called tariffs “long-term bullish” for crypto as inflation hedges, but Coin Bureau’s Nic Puckrin warned BTC remains tied to risk assets.
Robert Kiyosaki predicted a February crash to “buy the dip,” while VanEck projects a $160K-$180K BTC by late 2025. For now, traders face a stark reality: geopolitical shocks now dictate crypto’s swings, demanding self-reliant strategies in an era of state-driven chaos.
Crypto Market Collapse: Trade War Fears Trigger $2.2B Liquidations