Bitcoin News Today: Trade War Exposes Crypto's Hidden Macro Risk in $19B 24-Hour Crash

The U.S.-China trade war escalated dramatically in late October 2025, sending shockwaves through global financial markets and triggering the largest cryptocurrency liquidation event in history. President Donald Trump's announcement of a 100% tariff on Chinese imports, coupled with export controls on critical software, sparked a panic-driven sell-off that erased $19 billion in leveraged crypto positions within 24 hours [1]. Bitcoin, Ethereum, and Solana were among the hardest-hit assets, with prices plummeting by double-digit percentages. Bitcoin alone dropped from $123,000 to $107,000, while Ethereum fell nearly 14% and Solana nearly 20% [1].

The collapse followed weeks of rising geopolitical tensions, including China's rare earth export restrictions and Trump's executive order allowing crypto in 401(k) plans, which had driven Bitcoin to record highs earlier in the year [1]. The sudden policy shift exposed the fragility of leveraged positions in the crypto market, with over $5 billion in Bitcoin and $4 billion in Ethereum liquidated in a single day [1].

By Monday, however, the market began to stabilize as both nations signaled a willingness to de-escalate. China's Ministry of Commerce hinted at openness to negotiations, while Trump downplayed the conflict on Truth Social, claiming, "Don't worry about China, it will all be fine!" [2]. This easing of tensions prompted a partial rebound, with Bitcoin rising 3% to $115,220 and Ethereum surging 8.9% to $4,142 [2]. Institutional buyers also stepped in, including Marathon Digital Holdings, which purchased an additional 400 Bitcoins ($45.9 million) through FalconX [2].

Despite the recovery, analysts caution that volatility remains high. The liquidation event highlighted the crypto market's deep entanglement with global macroeconomic forces. "This crash was not just about leverage-it was a direct response to geopolitical risk," said Zaheer Ebtikar, CIO of Split Capital [4]. The event also underscored the role of algorithmic trading and thin liquidity in amplifying price swings [5].

The broader implications for the crypto sector are mixed. While the selloff wiped out $200 billion in market capitalization, it also cleared excessive leverage, potentially setting the stage for a healthier bull market [3]. Meanwhile, stablecoins emerged as a counterpoint to the chaos, with the U.S. stablecoin market surging past $300 billion in October 2025 amid regulatory clarity from the GENIUS Act [8]. The law, which mandates full-reserve backing for fiat-backed stablecoins, has attracted institutional players like JPMorgan and WisdomTree, signaling a shift toward mainstream adoption [6].

However, the trade war's impact on crypto fundamentals remains uncertain. U.S. Treasury Secretary Scott Bessent has positioned stablecoins as a strategic tool to bolster dollar dominance, noting their potential to rival foreign holders of U.S. debt [7]. If stablecoin demand continues to grow, it could reshape global capital flows, reducing reliance on traditional sovereign creditors like China [7].