The cryptocurrency market was thrown into chaos as traders betting on higher prices suffered massive losses, with over $2.2 billion in liquidations recorded within 24 hours. Bitcoin plummeted to $91,200 before a slight recovery, while Ethereum saw a staggering 20% decline, crashing to $2,500.
Trump’s Tariffs Spark Market Panic
The sell-off was triggered by newly imposed tariffs from former U.S. President Donald Trump on Canada, Mexico, and China. The announcement sent shockwaves through financial markets, spilling over into crypto. Investors scrambled to adjust their positions, leading to one of the worst liquidation events in crypto history—surpassing even the collapses of Terra (LUNA) and FTX.
$2.15b liquidated from the crypto market in the past 24 hours.
— Miles Deutscher (@milesdeutscher) February 3, 2025
Worst liquidation event in history in a single day.
Worse than LUNA. Worse than FTX ($1.6b). pic.twitter.com/5yeQUtoHkR
Futures Traders Take the Biggest Hit
According to CoinGlass data, futures traders bore the brunt of the crash, with $1.87 billion in long positions liquidated, compared to $345 million in short positions. Ethereum was hit hardest, with $600 million in ETH liquidations, followed by Bitcoin at $400 million.
The sharp downturn also saw a broader market sell-off, with most top 100 altcoins tanking between 15% and 30%. The extreme leverage in the system exacerbated the decline, as margin calls and forced liquidations accelerated the downturn.
Worst Altcoin Collapse Since COVID Crash
Market analysts are already calling this the worst altcoin collapse since the COVID-induced market crash. The rapid unwinding of leveraged positions has left many traders wrecked, with some warning against “revenge trading” to recoup losses.
Despite the bloodbath, Bitcoin has shown resilience, bouncing back to $93,600, though it remains down 6.5% on the day. Market sentiment remains fragile, and traders are bracing for further volatility in the coming days.
Also Read: MicroStrategy Pauses 12-Week Bitcoin Buying Streak, Holds $44 Billion in BTC Amid Market Correction
The next few days will determine whether this is a temporary shakeout or the start of a more prolonged downtrend. For now, caution is advised, as market uncertainty remains high.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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