Bitcoin News Today: Trump Tariffs Spark Crypto Crash, Diplomacy Fuels Record Rebound

The cryptocurrency market experienced a historic crash in late October 2025 following U.S. President Donald Trump's announcement of a 100% tariff on Chinese imports and export controls on critical software, triggering over $19 billion in liquidations and wiping out 1.6 million leveraged positions. Bitcoin plummeted 13% to $105,000, while Ethereum and Solana fell 20%-30%, marking the largest single-day liquidation in crypto history Coinglass^[1]. The sell-off, driven by excessive leverage in derivatives markets, mirrored the volatility seen during the 2020 pandemic crash Financial Express^[2].

China's Ministry of Commerce (MOFCOM) responded by framing its rare-earth export controls as lawful and non-prohibitive, emphasizing licensing for civilian trade and urging diplomatic dialogue with the U.S. MarketInsiders^[6]. MOFCOM warned of "resolute measures" if Washington escalated tensions but left room for negotiations, signaling potential for market stabilization as geopolitical risks receded MarketInsiders^[6]. Analysts noted that China's emphasis on licensing rather than bans reduced immediate supply-chain disruptions, calming some investor concerns MarketInsiders^[6].

Despite the initial turmoil, the crypto market rebounded sharply by October 12, with Bitcoin recovering to $112,000 and Ethereum regaining 25% of its losses. Institutional buyers and automated trading systems fueled the rebound, supported by diplomatic efforts between the U.S. and China to de-escalate tensions . Binance, one of the hardest-hit exchanges, reimbursed $283 million to affected users, attributing losses to market conditions rather than operational failures . Technical indicators, including Bitcoin's recovery above $110,000, suggested a temporary stabilization, though experts cautioned that renewed selling could occur if trade tensions resurged .

The crash exposed vulnerabilities in leveraged positions and stablecoin mechanisms, with USDe depegging 38% during the turmoil. However, the market's rapid rebound demonstrated resilience, fueled by long-term institutional confidence and regulatory clarity in key markets . Analysts highlighted that while short-term volatility remained, the broader crypto ecosystem's liquidity and diversification into DeFi and tokenized assets positioned it for recovery .

As of mid-October 2025, Bitcoin traded near $115,000, with market sentiment shifting from "extreme fear" to cautious optimism. The Intercontinental Exchange's $2 billion investment in Polymarket and the launch of S&P's Digital Markets 50 index signaled growing institutional acceptance of crypto as a legitimate asset class . While Trump's policies continued to influence market dynamics, the post-crash rebound underscored the sector's adaptability to macroeconomic shocks.