Bitcoin Drops 4% Triggering $560M Liquidations Amid Trump Tariff Fears

Bitcoin (BTC) experienced a significant price drop, falling from its all-time high (ATH) of $111,970 to around $107,000 on May 23, before slightly recovering to $109,231. This sudden decline triggered substantial liquidations in the crypto futures markets, totaling over $560 million. The volatility resulted in the liquidation of 160,905 traders on major exchanges, with long positions bearing the brunt of the losses.

The breakdown of liquidated positions revealed that $418.63 million of the $563.20 million in liquidated positions were long, while shorts accounted for the remaining $144.35 million. The largest single liquidation order was a BTC-USDT position on OKX worth $9.53 million. Bitcoin traders were the most affected, with liquidations amounting to $153.04 million, followed by Ethereum (ETH) traders with $144.19 million in liquidations. Most of these liquidations occurred in long positions.

Following the price decline, U.S. President Donald Trump's comments about imposing more tariffs on the European Union and Apple further spooked the market. This geopolitical tension exacerbated the sell-off, particularly affecting risk-on assets like Bitcoin and Ethereum. Ethereum's price fell from $2,731 to $2,508 before rebounding to $2,574, illustrating the broader market's sensitivity to macroeconomic signals.

Despite the volatility, Bitcoin's breakout above $109K remains a strong indicator of its resilience. Since breaking its prior ATH in November, coinciding with Trump's inauguration, BTC has shown remarkable strength amidst market volatility. This resilience is attributed to the growing perception of Bitcoin as "digital gold," with both institutional and retail investors viewing it as an inflation hedge and a safe-haven asset during macroeconomic instability.

The recent wave of liquidations underscores the risk-on nature of crypto markets. However, Bitcoin's relative resilience suggests its evolving role as a safe-haven asset amidst escalating global tensions. The event serves as a reminder of the importance of risk management and the potential for significant losses in leveraged trading. While the market remains bullish in the long term, short-term corrections can lead to substantial financial losses for traders who are heavily leveraged.