The cryptocurrency market is in freefall after President Donald Trump’s administration dropped a tariff bombshell that triggered one of the largest liquidation events in recent memory. Bitcoin, which had been trading comfortably above $100,000 just days ago, plunged to a three-week low of $91,441 before partially recovering, while over $2 billion in leveraged positions were liquidated in a brutal 24-hour span.
TL;DR
- Bitcoin crashed below $100,000, hitting a low of $91,441 — a three-week low — before rebounding to around $97,689
- Ethereum plummeted nearly 20%, touching $2,494, its weakest level since September 2024
- Over $2 billion in leveraged crypto positions were liquidated in 24 hours, affecting more than 250,000 traders
- Trump imposed 25% tariffs on imports from Canada and Mexico, plus 10% on Chinese goods
- Mexico later reached a deal to pause tariffs, helping Bitcoin recover above $100,000
The Tariff Trigger
On February 1, the Trump administration formally announced sweeping new tariffs: a 25% duty on imports from Canada and Mexico, alongside a 10% tariff on Chinese products. The administration framed these measures as necessary to address the flow of illicit drugs across national borders, but the immediate market reaction was swift and severe.
Analysts at Singapore-based trading firm QCP noted that the sell-off was broad-based and cut across asset classes. “Equities sank across regions, gold dipped, oil spiked, and crypto sold off violently,” the firm wrote in a market update. “This decorrelation reinforces the view that today’s risk-off move is driven by cross-asset portfolio rebalancing rather than a single-asset event.”
The connection between trade policy and crypto markets has become increasingly pronounced in 2025. As institutional adoption has grown, Bitcoin and other digital assets have become more correlated with traditional financial markets, meaning macroeconomic shocks now ripple through crypto with amplified intensity.
A Cascade of Liquidations
The price decline triggered a devastating cascade of forced liquidations. Market data shows that over $2 billion in leveraged positions were wiped out within 24 hours, making this one of the largest liquidation events of 2025. More than 250,000 traders saw their positions forcibly closed as prices plummeted past key support levels.
Bitcoin’s downturn actually began on January 31, when it slipped from over $105,000 to $102,000 within hours. The decline accelerated through the weekend, pushing BTC below the psychologically critical $100,000 mark and dragging the entire market down with it.
The altcoin market fared even worse. Ethereum fell nearly 20%, finding support just above $2,500. Solana dropped 10% to around $195, while XRP declined 17% to approximately $2.30. Dogecoin and Cardano both lost around 20% each, effectively erasing all gains made during the post-election rally in December 2024.
Regulatory Implications of Trade War Finance
The tariff-driven crash raises significant questions about the intersection of trade policy and cryptocurrency regulation. As governments weaponize tariffs, the crypto market’s vulnerability to geopolitical shocks highlights both the asset class’s maturity and its lingering growing pains.
BitMEX co-founder Arthur Hayes offered a blunt assessment of the situation, suggesting that more pain could be ahead before any relief arrives. “The beatings shall continue until moral improves,” Hayes wrote. “The pain stops when a TradFi outfit is on the verge of bankruptcy. Then the Fed reluctantly joins team Trump and prints that money.”
The incident also underscores the ongoing debate about whether cryptocurrencies serve as a hedge against geopolitical risk or remain primarily a risk-on asset. The current evidence suggests the latter, at least in the short term, as the market moved in lockstep with traditional risk assets during the tariff panic.
Mexico Tariff Pause Provides Temporary Relief
Late on February 2, Bitcoin trimmed its losses and pushed back above $100,000 after the United States agreed to pause tariffs on goods from Mexico following diplomatic negotiations. The partial de-escalation provided a brief respite for battered crypto markets, though significant uncertainty remains regarding tariffs on Canada and China.
The rapid policy reversal demonstrates how quickly geopolitical developments can swing crypto prices in both directions, a dynamic that regulators worldwide are watching closely as they develop frameworks for digital asset oversight.
Why This Matters
The February 2 crash is a watershed moment that proves cryptocurrency has fully entered the mainstream financial consciousness. When U.S. trade policy moves can wipe $2 billion from leveraged crypto positions in a single day, it is clear that digital assets are no longer operating in a vacuum. For regulators, this interconnection demands coherent policy frameworks that address crypto’s role in the broader financial ecosystem without stifling innovation. The Trump administration’s approach to both tariffs and crypto regulation will be defining factors for the market in 2025 and beyond.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency markets are highly volatile, and past performance is not indicative of future results. Always conduct your own research before making investment decisions.
BTC from $100K to $91K in 48 hours. the leverage was insane, 250K traders rekt
ETH dropped 20% to $2,494. weakest since sept 2024. altcoin season is so over
ETH down 20% to 2494 and people still call it a hedge against BTC. the beta on alts during risk-off is brutal
ETH down 20% to 2494 and people still call it a hedge against BTC. the beta on alts during risk-off is brutal
mexico pausing tariffs saved the bounce. without that deal BTC stays below 95k for weeks
macro_sponge_ 2B liquidated and 250K traders rekt in 48 hours. the leverage was absolutely insane going into that tariff news
250K traders liquidated in one day and btc was back above 100k within a week. leverage is a tax on the impatient
dustpile_ 250K traders learned the hard way that 100x longs on a saturday night with tariff headlines pending is financial suicide
dustpile_ 250k traders liquidated for $2B and BTC was back above $100k in a week. borrowed money is just a tax on people who cant manage risk
Felipe R. exactly. the people running 100x on a saturday night deserved what they got. dry powder at 91k was the trade
macro_sponge_ BTC recovered above 100k within a week of the liquidation event. the $91K wick got bought instantly by anyone who had dry powder
QCP nailed it with the cross-asset rebalancing take. this wasnt a crypto event, it was a risk-off event across everything
25% on canada and mexico but only 10% on china? the targeting made no sense and markets reflected that confusion
25% on canada and mexico but 10% on china makes zero economic sense. markets called the bluff immediately
25% on canada and mexico but 10% on china makes zero economic sense. markets called the bluff immediately
the tariff structure was clearly political not economic. 25% on allies, 10% on the actual strategic competitor. markets saw right through it
Marina D. 25% on canada mexico but 10% on china was pure political theater. markets priced in the noise within days and BTC was back above 100k
Lucia Fernandez called it, cross-asset rebalancing not a crypto-specific event. everything dumped simultaneously
250K traders rekt in 24 hours because nobody sized for a tariff headline on a saturday. 100x longs are basically a tax on people who dont manage risk
250K traders rekt in 24 hours because nobody sized for a tariff headline on a saturday. 100x longs are basically a tax on people who dont manage risk
ETH to 2494 was the real signal. alts always dump harder on macro events and people still hold through it expecting decoupling
ETH dropping 20% to $2,494 was the real damage. BTC recovered fast while alts took weeks to fill that gap
10% on china vs 25% on canada is backwards. china was the actual trade war target and got the smaller tariff. political optics over substance
tariff_math_ 10% on China vs 25% on Canada was pure political theater. markets saw through it instantly and BTC recovered above $100k within days
10% on china vs 25% on canada was always the tell. trump wanted a headline not a policy and 250k traders paid for it
2 billion liquidated in 24h and btc recovered within a week. fastest V shaped recovery I’ve seen since covid dump