Crypto Markets Lose $450M in 24 Hours Amid 25% U.S. Tariffs
1min read Cryptocurrency markets experienced significant volatility as U.S. tariffs were implemented, leading to substantial liquidations across various digital assets. The market turmoil resulted in $450 million in liquidations within a 24-hour period, affecting both bullish and bearish positions. This volatility was driven by the imposition of a 25% tariff on auto imports and a minimum 10% tariff on all exporters to the U.S., with additional duties on major trading partners in Asia and the European Union. China faced a 50% hike on several goods, and India saw a 26% fee on some of its exports.
Ask Aime: What is the impact of U.S. tariffs on cryptocurrency markets, and how have investors responded to this new market condition?
The impact of these tariffs was immediate and widespread. U.S. indices saw gains from the past three days wiped out, while Asian markets tumbled early Thursday. U.S. 10-year Treasury yields slumped to their lowest level in more than five months, and gold set a new record high. Cryptocurrencies were not immune to this market turmoil, with Bitcoin, Ether, and XRP experiencing significant price fluctuations.
Bitcoin initially inched above $87,000 as investors hoped for leaner long-term effects of the economic changes, with signs of a risk-on environment emerging at the start of the week. Ether and XRP traded above $1,900 and $2.15, respectively, with technical analysis suggesting higher moves in the near term. However, this euphoria was short-lived as crypto majors dipped as much as 5% from Wednesday’s highs before gradually stabilizing. In Asian morning hours on Thursday, Bitcoin traded just above $83,500 while Ether traded slightly over $1,800, effectively reversing all gains from Tuesday after a sudden drop following the Tokyo open.
This price volatility led to over $230 million in liquidations on both bullish and bearish bets. Bitcoin-tracked futures registered over $172 million in long and short liquidations alone, followed by Ether futures at $120 million and smaller altcoins at $50 million. Liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin, indicating that the trader is unable to meet the margin requirements for a leveraged position.
Single-sided large liquidations can signal the local top or bottom of a steep price move, allowing traders to position themselves accordingly. However, Thursday’s liquidations can be considered a sign of market uncertainty, reflecting the broader economic turmoil caused by the new tariffs. This uncertainty highlights the interconnected nature of global markets and the potential for significant volatility in response to major economic policy changes.
