The cryptocurrency market suffered one of its most brutal single-day sell-offs in history on Monday, February 3, 2025, as President Donald Trump’s sweeping tariff announcements sent shockwaves through global financial markets. The total crypto market capitalization plummeted from $3.41 trillion to $3 trillion in just 24 hours — a staggering 12% decline that wiped out $400 billion in value.
TL;DR
- Trump’s 25% tariffs on Canada and Mexico plus 10% on China triggered a massive crypto sell-off
- Ethereum suffered the steepest decline among major altcoins, plunging as much as 25% to an intraday low of $2,135
- Over $2.2 billion in liquidations occurred — the largest in crypto history, surpassing the FTX and Terra Luna collapses
- Bitcoin dropped below $100,000 to hit $91,441 before partially recovering
- Trump later paused tariffs on Mexico for one month, sparking a partial rebound across digital assets
The Tariff Trigger
On Saturday evening, February 1, President Trump signed executive orders imposing a 25% levy on all imported goods from Canada and Mexico, along with an additional 10% tariff on Chinese imports. The aggressive trade policy was scheduled to take effect on Tuesday, February 4, giving markets less than 72 hours to absorb the implications.
The announcements immediately raised fears of a full-blown trade war. Canada and Mexico both signaled plans to retaliate with their own tariffs on U.S. goods, creating the specter of escalating economic conflict between North America’s largest trading partners.
Ethereum Bears the Brunt
While Bitcoin captured most of the headlines, Ethereum absorbed the most punishing losses among major cryptocurrencies. ETH plummeted as much as 25% during Asian trading hours, touching an intraday low of $2,135 — a level not seen since early September 2024. The sell-off erased all gains Ethereum had made since Trump’s November election victory.
By midday Monday, ETH had partially recovered to trade around $2,695, still representing an 11% decline on the day. According to Bloomberg, leveraged Ether traders were caught especially off guard, with the unraveling of leveraged bets placing the token among the hardest-hit cryptocurrencies in the sell-off.
Altcoins Bloodbath
The carnage extended well beyond Ethereum. XRP suffered a dramatic 33% plunge before trimming losses, making it one of the worst-performing major tokens of the day. Solana (SOL) dropped approximately 8%, while numerous smaller altcoins saw declines ranging from 15% to over 40%.
The magnitude of the sell-off was reflected in the liquidation data. In the past 24 hours alone, 740,197 traders were liquidated, with total liquidations reaching $2.25 billion — the highest level ever recorded in crypto, surpassing even the liquidation spikes seen during the COVID-19 crash of March 2020 and the FTX collapse in November 2022.
A Temporary Reprieve
Cryptocurrencies staged a partial recovery on Monday after President Trump agreed to pause the implementation of tariffs on Mexico for one month. Mexican President Claudia Sheinbaum committed to sending 10,000 national guard troops to the U.S.-Mexico border as part of the agreement.
Later in the day, Trump extended a similar pause to Canada, allowing both countries time to negotiate. Ethereum bounced back to $2,881 after the Canada tariff pause was announced, though it remained well below pre-tariff levels. The rebound provided temporary relief but left markets deeply unsettled about what comes next.
Why Leveraged Positions Amplified the Damage
The severity of Monday’s crash was significantly amplified by the widespread use of leverage in crypto markets. Traders who had borrowed to amplify their positions faced margin calls as prices dropped, forcing automatic liquidations that pushed prices even lower in a cascading effect.
Crypto research strategist Matt Mena of 21Shares described the event as unprecedented: “In the past 24 hours alone, we have seen over $2.2 billion in liquidations — the largest in crypto history — surpassing even the fallout from FTX and Terra Luna.”
Why This Matters
The February 3 crash exposed the crypto market’s continued vulnerability to macroeconomic shocks, despite its maturation over recent years. While Bitcoin has increasingly been viewed as a potential hedge against fiat currency debasement, it remains a risk asset that gets sold during periods of market stress.
However, some analysts see a silver lining. Zach Pandl, head of research at Grayscale, suggested that tariffs could paradoxically benefit Bitcoin over the longer term. “To the extent that tariffs accelerate the fragmentation of the dollar-based global financial system, they could even increase Bitcoin adoption over the longer term,” Pandl explained. The theory holds that trade barriers could weaken fiat currencies and push investors toward decentralized alternatives.
For now, the market remains in wait-and-see mode. With tariffs on China still set to proceed and the pauses on Mexico and Canada being temporary, the crypto market faces an uncertain path forward. Traders will be closely watching for any signs of broader trade negotiations or further policy shifts that could either reignite the sell-off or restore confidence in risk assets.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk, including the potential for total loss. Always conduct your own research before making investment decisions.
i was long ETH at $2,400 and woke up to a 25% haircut. $2.2B in liquidations in one day is insane
surpassing the FTX and Terra Luna liquidation events says everything. leverage was way too high across the board
BTC holding $91k while ETH dumped to $2,135 is the tell. ethereum always gets punished harder in risk-off events