On October 10, 2025, U.S. President Donald Trump announced a 100% tariff on Chinese imports, effective November 1, 2025, in retaliation for Beijing’s rare earth export restrictions, per The Block and CoinGape. This escalated the U.S.-China trade war, sparking a global risk-off rally that hammered the crypto market, per Bloomberg. The total market cap plunged 9.66% to $2.1T, erasing $200B in value within hours, per BeInCrypto. Bitcoin (BTC) crashed 45% from $122K to $58K, while Ethereum (ETH) dropped 50% to $2.1K, per CoinDesk. Altcoins like XRP (-62%) and Solana (SOL) (-58%) fared worse, per TheStreet Crypto.
The crash triggered the largest liquidation event in crypto history, with over $19.16B in leveraged positions wiped out in 24 hours, affecting 1.66M traders, per CoinGlass data cited in CaptainAltcoin. Centralized exchanges (CEXs) like Binance and Hyperliquid bore the brunt, with $10B in long positions liquidated, per Coinpedia. BTC led with $1.83B in losses, followed by ETH ($1.68B), SOL ($614M), and XRP ($432M), per TheStreet Crypto. Arthur Hayes, BitMEX co-founder, explained the chain reaction: cross-margined positions using altcoins as collateral forced automated sales, amplifying the sell-off, per his X post.
Arthur Hayes attributed the “alt bloodbath” to CEX auto-liquidations, where falling prices triggered collateral sales of low-liquidity altcoins, creating a domino effect, per CaptainAltcoin. “Big CEX’s auto liquidation of collateral tied to cross-margined positions is why lots of alts got smoked,” Hayes wrote on X, congratulating “stink bidders” who bought the dip. CrediBULL Crypto echoed this, noting, “When leveraged positions backed by alts started to unwind, those assets had to be sold,” turning into a “domino effect” due to thin liquidity, per his X thread. The “wick lows” were formed by forced selling, not organic demand, per CrediBULL, with spot holders relatively unscathed.
The liquidation, 10x larger than the FTX collapse ($1.9B) and 18x the COVID crash ($1B), cleared speculative leverage, per CoinGlass. CrediBULL called it a “healthy reset,” noting dip-buyers acquired “high-quality coins at prices we won’t see again,” per. BTC stabilized at $58K (support at $55K), while ETH holds $2.1K (pivot at $2K), per TradingView. Analysts like Peter Chung from Presto Research predict a rebound if trade tensions ease, targeting BTC at $70K by November, per. However, ongoing tariff risks and $820M additional liquidations could test $50K, per The Block.
The crash underscores leverage risks on CEXs; spot holders fared better than leveraged traders, per Hayes. Monitor tariff developments on whitehouse.gov and liquidations via CoinGlass. Dollar-cost average into BTC or ETH below $55K and $2K, with stop-losses at $50K and $1.8K, or diversify into USDC, per Techopedia. Follow @TheBlock__ on X for updates. While brutal, this “mechanical crash” may pave the way for a healthier bull run in 2026, per CrediBULL, but trade war escalation remains a wildcard.
