Two Billion Dollars Liquidated in Bitcoin and Cryptocurrency — Thanks Donald Trump
Over $2 billion dollars were wiped out from the cryptocurrency market on Monday.
Yes, you read that right.
It was a chaotic way to start the week. Mass panic was seen in the market after President Donald Trump announced tariffs on goods from Canada, Mexico, and China.
What followed was massive fear.
Bitcoin plummeted from $105,000 to $91,000, triggering the largest liquidation event in crypto history.
This was worse than the FTX collapse. It was worse than the COVID crash.
Ethereum, the second-largest cryptocurrency, was also deep in the red. Its price dropped from $2900 to $2000 — a near 30% drop. There was eventually a recovery later in the day, though, as Bitcoin temporarily traded above $100,000.
Luckily, my FREE telegram group, which you can join here, and myself stayed protected as we anticipated a drop and took a hedge short.
But what I’m planning to do in this article is to examine exactly why such an announcement would affect Bitcoin and if this is something to be concerned about during Trump’s presidency.
Why Do Tariffs Even Hurt Bitcoin?
One of Trump’s primary goals is the desire to protect domestic industries. It’s been one of his biggest selling points in his campaign.
His latest policy involved aggressive tariffs on key U.S. trade partners.
In a nutshell, tariffs disrupt international trade, leading to higher costs for businesses and consumers. Historically, these policies have slowed economic growth, increased inflation, and pressured financial markets.
Bitcoin has often been compared to Gold. Many even call it the digital equivalent of gold. However, in moments of extreme uncertainty — such as surprise policy shifts — many investors liquidate risky assets to secure cash positions.
The immediate effect of the announcement was a rush to the exits. Investors feared the possibility of a wider economic downturn, leading to a sell-off in both traditional equities and crypto.
While some expected Bitcoin to act as a safe haven, the massive use of leverage in the crypto market caused a domino effect of liquidations, driving prices down even further.
As a result, Bitcoin saw a dramatic sell-off before rebounding back above $100,000 after Trump paused tariffs on Canada and Mexico.
The Largest Liquidation in Crypto History
The price drop liquidated over $2 billion in leveraged positions, making it the largest recorded liquidation event in crypto history.
When a trader trades on leverage, they essentially borrow money from the broker. The ones who go long with high leverage end up getting liquidated — an event where their positions are forcibly closed.
In order to close a long position (whether yourself or because you’re liquidated), you have to sell your position. This adds to the initial sell pressure that caused the initial price decline in the first place.
And the whole thing becomes a snowball effect. By the end of it, $2 billion was lost.
Should You Be Worried?
Well, Bitcoin managed to recover most of its losses. So did many altcoins though they still continue to show weakness relative to Bitcoin.
Furthermore, such 20–30% flushes are very common in bull markets. This has happened multiple times in previous cycles as well.
However, uncertainty remains. The cryptocurrency market has seemed rather sensitive to new policies.
Perhaps this is the effect of regulation.
If Trump’s tariff policies escalate into a full-blown trade war, markets — including crypto — could face further volatility.
Long-term, Bitcoin still holds strong fundamentals. Institutional adoption continues to grow, and Bitcoin ETFs are providing more mainstream investors with access to the market.
The best way to go about this would be to make sure that risk is managed.
Disclaimer: None of the information given below is meant to be financial advice. Any and all content presented below is made available solely for educational and informational purposes. Financial markets carry significant risks and it is important to do your own research before choosing to take any action.
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Two Billion Dollars Liquidated in Bitcoin and Cryptocurrency — Thanks Donald Trump was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
from The Capital - Medium https://ift.tt/uXanI4P
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