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Bitcoin experienced a significant decline during Asian trading hours, reaching a one-month low of $92,000 due to President Donald Trump’s stringent trade tariffs.
This steep drop initiated one of the largest liquidation events in the past year.
Red market
According to data from CryptoSlate, BTC‘s decline commenced on Jan. 31 when it fell from over $105,000 to $102,000 within a few hours.
The downturn persisted through the weekend, driving BTC below $100,000 and negatively impacting the broader market.
Market data indicates that most altcoins encountered similar difficulties. Ethereum decreased by nearly 20%, finding support just above the $2,500 level.
Conversely, Solana fell by 10%, settling at $195. XRP dropped 17% to $2.3, while other major assets, including Dogecoin and Cardano, each lost around 20%.
This price movement effectively erased the gains these assets achieved during the post-Trump election victory rally in December 2024.
Arthur Hayes, co-founder of BitMEX, warned that further losses could ensue. Hayes suggested that relief might only occur if a significant financial institution encounters a crisis, prompting the US Federal Reserve to step in with liquidity measures.
He stated:
“The beatings shall continue until morale improves. The pain stops when a TradFi outfit is on the verge of bankruptcy. Then the Fed reluctantly joins team Trump and prints that money.”
Trump tariff
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Analysts at the Singapore-based trading firm QCP noted that President Donald Trump’s newly implemented tariffs on major trading partners, including Mexico, Canada, and China, triggered the widespread market sell-off.
The firm also highlighted that the market downturn was widespread, as “equities sank across regions, gold dipped, oil spiked, and crypto sold off sharply.” It added:
“This decorrelation reinforces the view that today’s risk-off move is driven by cross-asset portfolio rebalancing rather than a single-asset event.”
On Feb. 1, the US president announced a 25% duty on imports from Canada and Mexico, along with a 10% tariff on Chinese goods. His administration asserts that the tariffs aim to address illegal immigration and drug trafficking.
The tariffs prompted immediate retaliation, with Canada, Mexico, and China responding with threats of countermeasures.
Liquidation galore
The sharp decline in the crypto market resulted in widespread liquidations, erasing over $2 billion and impacting more than 742,000 traders, according to CoinGlass data.
Traders with long positions—who anticipated price increases—incurred the most significant losses, totaling approximately $1.88 billion. Those holding short positions, expecting further declines, faced losses of about $379 million.
Crypto Market Liquidations (Source: CoinGlass)
Ethereum traders experienced the most significant impact, with total liquidations reaching $611 million, of which $447 million originated from long positions. Bitcoin followed closely, with $411 million in liquidations, including $340 million from long bets.
Traders speculating on other assets also lost $439 million during the reporting period.
Meanwhile, the largest single liquidation occurred on Binance, where a $25 million Ethereum trade was entirely wiped out.
The post Trump’s new tariffs caused $2 billion in liquidations appeared first on CryptoSlate.
