Bitcoin News Today: Crypto's $118K Plunge Mirrors Wall Street's Descent as Trade War Fears Unite Markets

Bitcoin plunged to $118,000 on October 10, 2025, as U.S.-China trade tensions escalated following President Donald Trump's announcement of potential "massive" tariff hikes on Chinese goods. The move triggered a sharp sell-off in crypto markets, with the global market capitalization dropping approximately $125 billion within hours. Over $824 million in leveraged positions were liquidated, according to CoinGlass data, with Bitcoin accounting for the largest share. Ethereum fell 4.7% to $4,104, while altcoins like Solana and XRP dropped more than 2%. The sell-off mirrored broader equity market declines, as the S&P 500 lost $1.2 trillion in value within 40 minutes of Trump's announcement Trump’s China Tariff Triggers Crypto Crash, But For How Long?^[1].

The liquidation wave was driven by forced unwinding of leveraged long positions, with over $670 million in losses concentrated among long traders. Bitcoin's price briefly dipped below $115,000, while Ethereum and other altcoins faced heightened pressure. Analysts attributed the volatility to renewed fears of a U.S.-China trade war, exacerbated by Trump's recent threats to cancel his planned meeting with Chinese President Xi Jinping and impose retaliatory measures against Beijing's rare earths export controls Trump’s China Tariff Triggers Crypto Crash, But For How Long?^[1]. The market reaction underscored crypto's growing sensitivity to macroeconomic and geopolitical risks, with institutional traders shifting capital toward traditional safe-haven assets like gold, which surged over 1% to $4,000 per ounce Bitcoin Dips Below $120K as U.S. – China Tensions Flare^[5].

Cross-market linkages between crypto and traditional finance intensified as traders adopted a "risk-off" posture. The Dow Jones Industrial Average fell 500 points, and the Nasdaq declined 2%, reflecting synchronized declines across asset classes. Crypto-related equities also suffered, with Coinbase (COIN), Robinhood (HOOD), and MicroStrategy (MSTR) each dropping 3%-6%. The selloff highlighted the interconnectedness of crypto and equities, particularly for firms with significant exposure to digital assets .

Analysts warned that volatility could persist for weeks if trade tensions remain unresolved. Short-term price action for Bitcoin is expected to consolidate within a $115,000–$118,000 range, with altcoins remaining under pressure. However, the market may stabilize if no formal tariff measures are announced, though a potential executive order or Chinese retaliation could extend the downturn by one to two weeks. Long-term risks include a broader macro correction similar to the 2019 trade war or 2022 Fed-driven sell-offs if tensions persist into November Trump’s China Tariff Triggers Crypto Crash, But For How Long?^[1].

The liquidation event also revealed structural vulnerabilities in leveraged trading. CoinGlass data showed over $600 million in liquidated positions, with Ethereum longs accounting for $235 million. Technical breakdowns in ETH's price, including a failure to hold key support levels, amplified the sell-off. Institutional selling pressure surged in the final hour of trading, with volume spiking six times the session average Ether's 7% Plunge Leads Crypto Liquidations in $600M Carnage^[3].

Regulatory and macroeconomic factors further compounded market uncertainty. The U.S. government shutdown delayed decisions on crypto legislation, including a spot ETF, while rising inflation expectations and potential rate cuts from the Federal Reserve added to investor caution. Despite the short-term turmoil, some analysts argued the drop could represent a healthy retracement in an otherwise strong bull market. Bitcoin remains up over 30% year-to-date, driven by inflows into spot ETFs and expectations of Fed rate cuts .

The trade war-driven volatility reinforced crypto's role as both a risk asset and a potential hedge against economic instability. Historical patterns during past trade wars showed similar sell-offs followed by rebounds as Bitcoin's perceived value preservation narrative gained traction. However, immediate risks include further capital flight to traditional safe havens and prolonged uncertainty in U.S.-China relations.