Trump's Tariffs Spark $1B Crypto Bloodbath

Cryptocurrency markets experienced a tumultuous 24 hours, with over $1 billion in liquidations across derivatives trading platforms, according to data from CoinGlass. The sudden surge in liquidations was triggered by escalating trade tensions, as U.S. President Donald Trump imposed 25% tariffs on Canada and Mexico, the United States' largest trading partners.

The majority of liquidations, around 87%, came from long positions, following a volatile start to March that saw double-digit losses erase similarly large gains from earlier in the month. On March 4, the S&P 500 stock index fell nearly 2% in morning trading, reflecting broader market uncertainty.

Bitcoin (BTC) prices declined to around $82,000 after reaching highs of approximately $93,000 on March 3. Other cryptocurrencies, such as Ether (ETH) and Solana (SOL), also experienced significant losses, dropping by around 12% and 20%, respectively.

The market drawdown was a stark contrast to the optimism that had prevailed just days earlier, when Trump hinted at plans to create a U.S. crypto reserve holding a diverse range of tokens, including BTC, ETH, XRP (XRP), and Cardano (ADA).

Bitcoin longs accounted for the largest portion of liquidated positions, with over $300 million in losses in the past 24 hours. SOL, XRP, and ADA positions collectively suffered more than $150 million in liquidations, according to CoinGlass data.

The tariff turmoil threatens to erase gains from the so-called "Trump effect," which saw Bitcoin's price rise from $69,374 on Election Day (Nov. 5) to a record $108,786 when the new administration took office on Jan. 20. Since then, Bitcoin's price has mostly fallen, dropping to less than $80,000 on Feb. 28, a 26% decline.

The sell-off signals that macroeconomic factors, such as a looming trade war and weakening global economy, could outweigh bullish industry developments, including the U.S. Securities and Exchange Commission's dismissal of several lawsuits against crypto firms in February.