US-China Trade Tensions Trigger Largest Crypto Market Wipeout in History

Cryptocurrency markets just had their worst day on record. $19 billion in liquidations gone in 24 hours.

Over 1.6 million traders got caught in the massacre. Bitcoin dropped from $126,000 to $104,500. Ethereum fell harder, and some altcoins? They lost half their value before most people could even react to what was happening.

President Trump set it off with an announcement nobody saw coming. A 100% tariff on Chinese imports starting November 1. Export controls on critical software, too. China had already moved to lock down rare earth minerals and industrial components, but this escalated everything. Risk assets across global markets took an immediate hit.

Bitcoin Network Holds Up When Others Crumble

Most cryptocurrencies suffered significant losses during the selloff. Bitcoin’s network showed different characteristics. The blockchain continued operating throughout the event. Transaction fees increased and confirmation times extended as users moved funds, but block processing remained uninterrupted. The base layer maintained functionality despite heavy selling pressure, unlike some other networks that have experienced outages during periods of extreme stress.

Bitcoin climbed back to around $112,500 by Saturday morning, a 15% drop from the highs. Altcoins remain 30-50% below pre-crash levels. The performance difference highlights Bitcoin’s relative stability during market stress. BTC holders took losses but maintained positions. Altcoin traders faced steeper drawdowns.

The crash exposed Bitcoin’s transaction capacity constraints. When users rushed to move funds simultaneously, fees increased and confirmation times extended. This pattern repeats during volatility spikes, driving interest toward scalability solutions.

The bitcoin hyper presale attracted whale participation during the downturn—several wallets committed six-figure amounts while markets dropped. The project uses Solana’s Virtual Machine for off-chain processing with zero-knowledge proofs, maintaining security. Infrastructure projects addressing transaction speed and costs are gaining institutional attention as network limitations become apparent.

Traditional Markets Sink Alongside Crypto

The S&P 500 fell 2.7%, erasing the week’s gains. According to federal data, this index tracks the large-cap U.S. equities, which represent approximately 80% of the market capitalization on offer. Technology stocks led the decline, with the Nasdaq 100 dropping 3.5%. The Magnificent Seven tech stocks fell 3.8% as traders moved to reduce exposure across risk assets.

Liquidations were concentrated in long positions. Approximately $16.7 billion in bullish bets were force-closed as prices fell. In the weeks before the event, leverage ratios were rising, which would facilitate the spread of liquidations once the selling commenced. Exchange architecture was unable to sustain the volume, and some platforms were recording temporary delays in order processing.

The magnitude is higher than the past significant liquidation activities. In March 2020, the crash of COVID-19 saw $1.2 billion in liquidations, while the ex-FTX bankruptcy in November 2022 caused closures worth billions of dollars. This event represents the largest forced deleveraging in crypto market history, approximately 20 times larger than the COVID crash.

Institutional Buyers See Opportunity in Market Reset

Several analysts view this as a correction rather than a trend reversal. Lower interest rates historically drive capital into Bitcoin as investors seek higher returns, with major exchanges proceeding with token listings despite volatility. Market cycles typically feature sharp pullbacks that clear excess leverage before resuming upward momentum.

On-chain statistics indicate that big holders had purchased more than 30,000 BTC in 48 hours following the original fall. The institutional demand remained high during the week before the crash. This purchase action points to the high-level investors exploiting volatility as a gateway.

In spite of the volatility shown during the week, Bitcoin is holding onto gains recorded within a year. The larger uptrend seems not to end, but traders are still worried about a further fall in case of the deterioration of trade tensions.

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