On April 2, 2025, the cryptocurrency market faced a significant downturn following President Donald Trump's tariff announcement, leading to over $500 million in liquidations.
Why Trump’s Tariffs Collapsed the Crypto Market
Trump's announcement of tariffs on imports from China, the EU, and Mexico led to a downturn in risk assets, including cryptocurrencies. Bitcoin fell by 6% within hours, resulting in a $200 billion decrease in the cryptocurrency market capitalization.
Mikkel Morch, founder of the crypto hedge fund ARK36, noted:
> "We’re witnessing a macro-driven sell-off in crypto markets. Bitcoin’s sharp drop was triggered by investors pricing in economic uncertainty after Trump’s tariff announcement."
Extent of Liquidations and Their Impact
As Bitcoin plummeted, a cascade of liquidations followed, affecting Ethereum, Solana, XRP, and Cardano. Coinglass reported that liquidations totaled $489.07 million, with $257 million from long positions and $232 million from shorts, resulting in 159,333 traders being liquidated.
Lisa Wade, CEO of DigitalX, commented:
> "It’s a brutal reminder of just how fragile the crypto market is."
Expert Opinions and Future Predictions
Industry experts have commented on how Trump's policies can significantly impact the market. Peter Chung, Head of Research at Presto Research, stated:
> "Crypto bulls didn’t last long as weak macro data and Trump’s tariff rhetoric dragged risk assets down."
Despite short-term risks, many analysts remain optimistic. Scott Melker, known trader, said:
> "Tariff uncertainty will cause turbulence, but Bitcoin is a strong hedge against economic instability."
Trump’s tariff announcement has created significant ripples through the cryptocurrency market and caused one of the largest liquidation events seen in recent months. While short-term uncertainty persists, the long-term outlook for Bitcoin remains bullish.
