USDBitcoin’s Market Crash Shakes Crypto and TradFi Amid Trade War Fears
Crypto Liquidations Surge as Bitcoin Plummets Below $100K
Bitcoin’s price took a sharp dive over the weekend, falling below $100,000 and deepening its losses into the next trading session. The steepest drop saw BTC touching $91,163, marking its lowest point in more than three weeks. Market jitters were fueled by growing concerns over escalating trade wars, prompting investors to pull back from riskier assets.
Bitcoin had struggled to hold above $108,000 on January 20, indicating weak buy-side pressure before eventually slipping beneath $99,000. It later tested support levels between $92,000 and $96,000, highlighting the internal supply zones where traders sought to stabilize the market.
Bybit CEO Ben Zhou projected that total liquidations in the crypto market could range between $8 billion and $10 billion, a figure significantly higher than the previous $2.24 billion reported in 24-hour liquidations on February 3. More than 730,000 traders saw their positions wiped out, with the largest single liquidation order reaching $25.6 million on Binance’s ETH/BTC trading pair.
Despite the bloodbath, some traders capitalized on the downturn, including one who secured nearly $16 million from a 50x leveraged short position, underscoring the volatility-driven profit opportunities in crypto.
The fallout from Bitcoin’s decline was not limited to the digital asset market. Asian crypto-related stocks mirrored the slump, with Japan’s Metaplanet dropping 9.44%, SBI Holdings falling 3.60%, and Hong Kong-listed OSL Group shedding 2.69%. Boyaa, Asia’s largest corporate Bitcoin holder, also suffered a 4.64% decline.
These losses outpaced broader market movements, as the Nikkei 225 slid 2.66% while the Hang Seng Index remained largely flat, down just 0.04%. Meanwhile, U.S. stock futures signaled additional turbulence, pointing to a rough start for Wall Street’s trading week.
Tensions in the global economy played a critical role in the broader sell-off. U.S. President Donald Trump imposed a 25% tariff on imports from Canada and Mexico, alongside a 10% tariff on Chinese goods. In response, Canada retaliated with a 25% tariff on CA$155 billion worth of U.S. imports, while Mexico also vowed countermeasures. China escalated its stance by filing a complaint with the World Trade Organization and preparing additional tariffs of its own.
Trump has hinted at extending tariffs to the European Union, triggering warnings from EU leaders such as German Chancellor Olaf Scholz, who suggested a retaliatory tariff hike of 50% or more on U.S. goods. Amid the heated trade landscape, Trump called the UK “out of line,” as he left the door open for negotiations. The uncertainty led to a sharp pullback in risk assets, with crypto markets reacting swiftly to the potential macroeconomic fallout.
Wintermute CEO Evgeny Gaevoy dismissed speculation that Bitcoin’s price drop was manipulated, emphasizing that the downturn was a direct consequence of traditional finance events. “Understanding that our little crypto market is now very directly linked to the real world outside […] is pretty essential to being a (more) successful trader,” Gaevoy noted, underscoring the increasing connection between digital assets and macroeconomic factors.
He refuted claims that major crypto firms were deliberately triggering liquidations, instead pointing to inventory management strategies that can amplify volatility during downturns. Institutional trading patterns have played a role in past crashes, as seen in August 2024, when five major market makers offloaded 130,000 ETH worth $290 million.
Despite the recent turmoil, some analysts see a longer-term bullish case for Bitcoin. Jeff Park, a strategist at Bitwise, argued that Trump’s tariff policies could ultimately accelerate Bitcoin’s growth. Citing the Triffin dilemma, Park suggested that U.S. policymakers may need to weaken the dollar to maintain global trade demand. He believes the administration’s moves are designed to push foreign nations toward de-dollarization, which could, in turn, lead to lower U.S. bond yields and a reduced reliance on external investment.
If tariffs continue to disrupt global trade, Park predicts that Bitcoin will emerge as a key hedge against inflation and fiat devaluation. “As the world enters a sustained tariff war, the demand for Bitcoin will skyrocket,” he projected.
Historically, Bitcoin has thrived around the Lunar New Year, posting gains in 83% of past cycles. However, this year’s economic uncertainties may disrupt its decade-long bullish trend during the holiday period.
Bitget chief analyst Ryan Lee cautioned that macroeconomic fears, rather than speculative trading, are driving the current downturn. Over the past week, Bitcoin has shed 6.3% of its value, though Park maintains that the ongoing economic shifts could ultimately strengthen Bitcoin’s long-term appeal.
This article has been refined and enhanced by ChatGPT.
