Crypto Crashes as Trump Tariffs Hit Markets

The crypto market has suffered its biggest liquidation event since the FTX collapse and COVID-era crashes. Over $2.25 billion worth of assets were wiped out in less than 24 hours as U.S. President Donald Trump’s trade war took effect, prompting traders to reduce exposure to risk assets.

Bloodbath in Crypto Markets

Within just 24 hours, the crypto market experienced one of the sharpest declines in its history. The total market capitalization plunged by 12%, dropping from $3.4 trillion to $3.04 trillion during early European trading hours as investors rushed to offload their crypto holdings. Trading volumes surged by 178.2% , with most major cryptocurrencies losing more than 25% of their value.

Data from CoinGlass indicates that over 738,000 traders were liquidated in the past 24 hours, with total liquidations reaching $2.25 billion. 

Long positions bore the brunt of the crash, with $1.87 billion wiped out, while short liquidations accounted for $377.78 million. Among the affected assets, Ethereum (ETH) suffered the most.

More than $610.07 million worth of ETH long positions were liquidated in the last 24 hours, making it the hardest-hit altcoin. Bitcoin (BTC) saw $411.3 million in long liquidations, while other cryptocurrencies combined accounted for $439.2 million in long position losses.

Ethereum (ETH) lost the most longs during the massive crypto crash. Source: CoinGlass .

The most significant single liquidation order occurred on Binance, involving an ETH/BTC trade worth $25.64 million.

Major Cryptos Plummet

The market crash affected all major cryptocurrencies. Ethereum (ETH) dropped 26.5% during Asian trading hours as it failed to hold the $3,000 support level, eventually falling to $2,120 and erasing gains accumulated since early November.

XRP, Cardano (ADA) , and Dogecoin (DOGE) also suffered declines of over 25%. Bitcoin (BTC), while affected, saw a comparatively smaller drop of 7.3%, reaching a low of approximately $92,500 during Monday’s Asian trading session.

Why is Crypto Crashing?

Over the weekend, President Donald Trump signed an executive order imposing a 25% tariff on imports from Canada and Mexico, along with an additional 10% tariff on Chinese imports, set to take effect on Tuesday, February 4.

The announcement sparked a sharp sell-off in equities. On Monday, SP 500 futures fell 1.92%, and Nasdaq-100 futures tumbled 2.44%. Asian markets followed suit, with Japan’s Nikkei 225 dropping 2.66% and European exchanges opening lower.

Asian markets also reacted negatively, with Japan’s Nikkei 225 falling 2.66%. European stock markets opened lower as well.

Analysts at 10x Research noted that while these tariffs had been widely anticipated, “the market had been largely fixated on the DeepSeek saga, seemingly underestimating the geopolitical response and the pushback from foreign leaders threatening retaliation.”

Stock markets had already been under pressure following the launch of China’s DeepSeek AI, which raised concerns about US tech giants losing their competitive edge. Investors reacted by selling off major tech names, with Nvidia among the hardest hit.

On the Flipside

• Although uncertainty dominates the markets, crypto players see this historic crypto crash as an opportunity to buy at discount prices.

Why This Matters

The 24/7 crypto markets have become a key indicator of broader market sentiment. Since US trading partners announced swift retaliation, significant turbulence is likely to continue on Monday when US stock exchanges open.

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