President Donald Trump warned of a sweeping 100% tariff on Chinese imports, intensifying trade tensions and rattling global markets. The announcement sparked a rapid exodus from crypto, with traders pulling roughly $18 billion from digital assets in a matter of hours.
The move comes amid rising friction over China’s export controls on rare earth minerals and critical technologies – stoking fears of escalating retaliation and supply chain disruption.
Many crypto outlets described the market rout as “the largest liquidation event in crypto history.” Bitcoin has fallen nearly 10% over the past five days, trading around $111,600 as of 3:45 p.m. ET after briefly plunging to $103,000 on Friday.
Ether dropped from $4,365 on Friday to about $3,745, a decline of roughly 14%, while Solana slid almost 20%, falling from $223 to $179 during the same period.
Drivers Behind the Market Shock
Trump framed the tariff escalation as a response to what he called China’s “hostile” export behavior, especially over strategic minerals essential to advanced manufacturing and defense. He argued that imposing the tariff would protect U.S. interests and restore leverage.
Crypto markets, already vulnerable to macro headlines, were quick to react. Automated liquidations and margin calls amplified losses. Many traders viewed the announcement as a signal of heightened geopolitical risk, prompting a flight from high-beta assets.
The sell-off spanned across major coins. Bitcoin and Ethereum experienced sharp intraday drops, while altcoins with thinner liquidity fared worse. The timing also inflicted damage: some positions were highly leveraged ahead of weekend news flows.
Implications, Risks & Market Outlook
The tariff threat shifts risk dynamics across asset classes. For crypto, the sell-off underscores that even long-hyped sectors are not insulated from macro and geopolitical shocks. Investor confidence, especially in leveraged positions, is more fragile than some narratives suggest.
Equity markets are poised for volatility. Tech and industrial stocks with China exposure may face outsized headwinds. Any retaliation from Beijing – including counter-tariffs or stricter export controls – could deepen the sell-off.
Supply chain flows, particularly of rare earths and critical components, must now be closely watched. Delays or cutoff risks could ripple through semiconductor, battery, and defense sectors.
On the policy side, markets and diplomats alike will watch how China responds. If it opts for measured counters, escalation may be blunted. An aggressive counterattack, however, could spark a full-blown trade war.
