The cryptocurrency market experienced significant volatility following U.S. President Donald Trump’s announcement of sweeping new tariffs. This led to a sharp drop in prices for Bitcoin and Ethereum, with the total crypto market cap slipping by 2%. The reaction underlines the sensitivity of the crypto market to global macroeconomic shocks.
The price plunge resulted in over $490 million worth of leveraged positions being liquidated, affecting more than 160,000 traders. Bitcoin futures saw $170 million in liquidations, while Ethereum contracts lost $120 million. Interestingly, both bullish and bearish traders were impacted by the downturn.
Market sentiment quickly shifted towards fear as traders fully assessed the impact of the tariffs. The Crypto Fear & Greed Index dropped to 24, indicating heightened fear across the market. This sharp shift highlights how sensitive the market is to significant policy changes.
The sell-off in the stock market, which saw the S&P 500 futures shedding $2 trillion in market capitalization within 15 minutes of the tariff announcement, also fueled losses in the cryptocurrency market. Major tech stocks experienced significant losses, leading to a broad sell-off that spilled over into the crypto markets.
Ultimately, the crypto market crash was directly caused by the U.S. trade tariff announcements, sparking fear, mass liquidations, and aligning with a global equity sell-off. Geopolitical policy changes, rather than rumors, were identified as the root cause of the crash. The increased correlation between traditional equities and cryptocurrencies has further amplified the impact of such global events on the crypto market.
