Bitcoin and Crypto Market Crash and Rebound After Trump’s Tariff Shock Sparks $5B Liquidation Frenzy

Bitcoin (BTC) experienced one of its sharpest intraday sell-offs in months, plunging from around $121,500 to below $106,000 before rebounding to $114,000.

The move came shortly after U.S. President Donald Trump announced a 100% tariff on all Chinese imports, igniting fears of a renewed global trade war and triggering widespread panic across both traditional and digital markets.

The shock announcement, made via Truth Social, accused Beijing of “extraordinarily aggressive trade actions,” including plans to restrict exports of key materials. In response, Trump vowed “immediate and severe” economic retaliation — a policy shift that rattled investors already nervous about inflation and economic slowdown.

Ethereum (ETH) mirrored Bitcoin’s decline, briefly slipping below $3,700 before stabilizing near $3,760. XRP also suffered heavy losses, dropping over 30% to touch the $2 mark, its lowest in over a month. Altcoins across the board faced double-digit declines, with Solana, Dogecoin, and Cardano seeing accelerated sell-offs as market liquidity thinned.

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The crash triggered over $5 billion in crypto liquidations within 24 hours, according to Coinglass data. Nearly $4.7 billion came from long positions, as traders betting on higher prices were wiped out during the rapid downturn. The largest wave hit within a single hour, totaling $3.3 billion, marking one of the biggest liquidation events of 2025.

Analysts say the combination of macroeconomic uncertainty and overleveraged positions created a “perfect storm.” As futures markets tumbled, cascading margin calls forced mass selling across exchanges.

Despite the turmoil, Bitcoin’s quick recovery above $110,000 suggests buyers are defending key support levels, with some traders viewing the panic-driven drop as an opportunity to accumulate before volatility subsides.