Bitcoin Drops 21% as Trump’s Tariffs Shake Global Markets

Bitcoin Crashes Below $92K as Trump’s New Tariffs Trigger Market Selloff

The cryptocurrency market faced a sharp downturn on February 3, 2025, as President Donald Trump’s newly announced tariffs on major trading partners fueled fears of an international trade war. Bitcoin (BTC) plummeted to a three-week low of $91,530 before rebounding to $95,306, while the broader crypto market suffered a severe correction.

The total crypto market cap plunged by over $700 billion in just four days, collapsing from $3.57 trillion on January 31 to an intraday low of $2.81 trillion—a 21% decline that erased months of gains and brought valuations to their lowest levels since November 2024.

What Triggered This Crypto Market Crash?

The market-wide selloff was triggered on February 1, when President Trump signed an executive order imposing steep tariffs on key trading partners:

25% tariff on imports from Canada and Mexico
10% tariff on Chinese goods
10% tariff specifically targeting Canada’s energy and oil sectors

These tariffs, set to take effect on February 4, sparked fears of a global trade war, sending shockwaves across financial markets.

Global Reactions Amplify Market Uncertainty

Mexico’s President Claudia Sheinbaum and Canada’s Prime Minister Justin Trudeau announced retaliatory measures.
China vowed to challenge the tariffs at the World Trade Organization (WTO), escalating tensions further.
Traditional financial markets also reacted negatively, with stocks and commodities seeing sharp declines.

With uncertainty rising, risk assets—including cryptocurrencies—saw massive liquidations as traders rushed to exit positions.

Crypto Market Liquidations Reach Historic Levels

According to Coinglass, the crypto market experienced one of its largest liquidation events ever, with over $2.32 billion in positions wiped out in just 24 hours.

$1.93 billion of these liquidations came from long positions, indicating that most traders were betting on continued bullish momentum.
Over 738,000 traders were affected.
The largest single liquidation occurred on HTX, where a BTC-USDT position worth $38.78 million was liquidated.

Altcoins Also Face Heavy Losses

Ethereum (ETH) plunged 16% to $2,326.
XRP dropped 16.4% to $1.94.
BNB Chain’s Dogecoin, Cardano (ADA), and Tron (TRX) all suffered double-digit percentage losses.

Asian crypto stocks were also hit hard:

Japan’s Metaplanet closed down 9.44%.
Hong Kong’s OSL Group fell 2.69%.
Boyaa, Asia’s largest publicly traded Bitcoin holder, saw its shares drop 4.64%.

How Does This Compare to Past Crypto Market Crashes?

This latest market correction is more severe than several historical crypto crashes, including:

The COVID-19 crash (March 2020), which led to $2.9 billion in liquidations.
The FTX collapse (November 2022), which resulted in $1.6 billion in liquidations.

With the tariffs set to be implemented on February 4, traders and investors are now bracing for potential retaliatory actions from affected nations, which could further impact both traditional financial markets and cryptocurrencies.

The coming days will be crucial in determining the short-term direction of Bitcoin and the overall crypto market.

Final Thoughts

The combination of geopolitical uncertainty, trade war fears, and mass liquidations has led to one of the most dramatic corrections in recent crypto history. If tensions escalate, Bitcoin and other cryptocurrencies could face further downside pressure, while traditional markets may also see increased volatility.

Will Bitcoin recover, or is this the start of a prolonged bearish phase? All eyes are now on February 4 and the global response to Trump’s tariffs.

source: CoinMarketCap