The cryptocurrency market experienced its largest-ever liquidation on Friday after President Donald Trump threatened to impose an additional 100% tariff on imports from China. According to crypto data analytics platform CoinGlass, this policy shift triggered a massive sell-off that wiped out $18.28 billion in digital assets, exposing the high-risk leverage in the crypto space.
Bitcoin, ether, and solana were among the most heavily affected cryptocurrencies. Within 24 hours, approximately $5 billion of bitcoin was liquidated, along with $4 billion of ether and $2 billion of solana. The scale of these liquidations marks the “largest liquidation event in crypto history,” CoinGlass noted in a post on X.
Market Volatility Hits Both Crypto and Traditional Stocks
The crypto crash coincided with a broad market downturn, as major U.S. stock indices saw steep declines. On Friday, the Nasdaq and S&P 500 experienced their sharpest drops in six months, reflecting investor uncertainty over U.S.-China trade tensions.
Bitcoin, the world’s largest cryptocurrency, fell nearly 10% over the last five days, trading at $111,616.20 as of 3:45 p.m. ET, down from a low of $103,000 on Friday afternoon. Ether, the second-largest digital currency by market capitalization, dropped 14.2% from $4,365.63 to $3,742.88. Solana, meanwhile, fell almost 20%, from $223.10 to $178.72.
Analysts attribute the rapid sell-off to leveraged positions in the crypto market, which amplified losses as traders scrambled to liquidate holdings amid uncertainty over trade policy and tariffs.
Trump’s Crypto-Friendly Policies Initially Boosted Digital Assets
Interestingly, cryptocurrencies had seen significant gains earlier this year, largely due to Trump’s evolving stance on digital assets. Initially dismissive of bitcoin as “based on thin air,” Trump later embraced crypto, speaking at conventions, launching a meme coin, and proposing the creation of a strategic crypto reserve.
Further fueling the bullish trend, Trump signed an executive order allowing digital assets, including cryptocurrencies, to be included in 401(k) retirement plans. This move helped push bitcoin to a record high of $124,000 last week, highlighting how political decisions can have direct and immediate impacts on the cryptocurrency market.
Trade Tensions Between Washington and Beijing Resurface
The crypto crash comes amid renewed trade tensions between the U.S. and China. Despite ongoing negotiations, relations deteriorated this week after China introduced export restrictions on critical rare earth minerals, which are essential for manufacturing advanced technology.
Trump’s announcement of potential 100% tariffs on Chinese goods further heightened market fears, signaling the possibility of a new wave of trade-related volatility that could impact both traditional markets and digital assets.
What This Means for Investors
Market experts warn that high leverage in crypto trading makes the sector particularly vulnerable to external shocks like tariffs, regulatory changes, or geopolitical tensions. Traders using borrowed funds to invest in cryptocurrencies can face rapid liquidation during periods of high volatility, as demonstrated in Friday’s historic sell-off.
For long-term investors, the recent turmoil underscores the importance of diversification and risk management. While cryptocurrencies offer the potential for high returns, the market remains highly sensitive to political developments, policy announcements, and global economic factors.
Key Takeaways from the $18 Billion Crypto Liquidation
Largest crypto liquidation in history: $18.28 billion wiped out in hours.
Major coins affected: Bitcoin, ether, and solana experienced significant losses.
Market correlation: U.S. stock indices like Nasdaq and S&P 500 fell sharply.
Trump’s influence: Policy changes and executive orders previously boosted crypto markets.
Ongoing trade tensions: China’s export restrictions and proposed U.S. tariffs heightened uncertainty.
Investor risk: Leveraged positions in crypto remain highly vulnerable to sudden market shocks.
As cryptocurrency markets continue to intersect with global politics, investors should monitor policy announcements closely. The unprecedented $18 billion sell-off serves as a reminder that even the most popular digital currencies are not immune to the ripple effects of international trade and geopolitical decisions.
