Bitcoin News Today: Tariff Shock Exposes Bitcoin's Fragile Hedge Against Fiat

Bitcoin Demand Turns Negative Amid Tariff Shock and Market Turmoil

Bitcoin (BTC) plummeted below $110,000 in late October 2025 following U.S. President Donald Trump's announcement of a 100% tariff on Chinese imports, triggering a historic selloff in cryptocurrency markets. The move, framed as a retaliatory measure against China's export controls on rare earth minerals, sent shockwaves through global financial markets, with Bitcoin dropping 12% in 24 hours to $104,782 and Ethereum (ETH) tumbling 16% to $3,700 Coindesk^[1]. Over $19 billion in leveraged crypto positions were liquidated within hours, according to data from CoinGlass, marking the largest single-day liquidation event in crypto history CNN^[4].

The tariff announcement, made via a Truth Social post, exacerbated preexisting trade tensions and intensified macroeconomic uncertainty. The S&P 500 fell 2% in a single session-the steepest decline since April 2025-while gold surged to $4,000 per ounce as investors sought safe-haven assets Forbes^[2]. Bitcoin's decline mirrored broader market panic, with altcoins like Solana (SOL) and XRP falling 20%-30%. The U.S. dollar initially strengthened against major currencies, though the Federal Reserve's rate-cut expectations limited its gains Bitunix^[3].

Leverage and derivatives activity amplified the selloff. Perpetual futures funding rates turned deeply negative as short positions surged, and open interest in Bitcoin futures fell by over 10% in 24 hours, reflecting forced liquidations of speculative capital Bitunix^[3]. "This was a leveraged short squeeze," said Ram Ahluwalia, founder of Lumida Wealth, noting that overbought conditions and Trump's tariff threat combined to trigger a "full leverage reset" Coindesk^[1].

The market reaction underscored crypto's integration into global macroeconomic dynamics. Bitcoin's correlation with the U.S. dollar index (DXY) remained negative, with a stronger dollar exacerbating downward pressure on crypto assets. Institutional flows also shifted: U.S. Bitcoin ETFs saw redemptions as investors reduced risk, though long-term holders remained stable, with on-chain data showing minimal movement in coins held for over a year Bitunix^[3].

Analysts debated whether the crash represented a structural collapse or a temporary purge of excess leverage. Tom Lee of Fundstrat called it a "buying opportunity," citing blockchain and AI as long-term growth drivers, while others warned of prolonged volatility if trade tensions escalate . The tariff shock also reignited debates over crypto's role as a hedge against fiat instability, with gold's 50% year-to-date rally highlighting competing narratives in the "debasement trade" .

Key technical levels now define Bitcoin's near-term outlook. A sustained close above $116,000 could signal a short-term rebound, while a breakdown below $106,000 risks testing the 2023 support zone. Open interest and funding rate normalization suggest liquidation pressure has eased, but macroeconomic uncertainty-particularly China's potential retaliatory measures-remains a wildcard Bitunix^[3].

The event also exposed vulnerabilities in crypto market liquidity. During the selloff, Bitcoin-USD spreads widened by 120%, and major exchanges like Binance reported "high load" as automated bots struggled with price discovery Bitunix^[3]. Despite the turmoil, the market absorbed record liquidations without systemic failure, reinforcing crypto's growing institutional resilience.

As of October 11, 2025, Bitcoin traded at $111,616, down 10% from its August 2025 peak. The path forward hinges on trade developments, Fed policy, and whether institutional demand-driven by ETF inflows and corporate treasuries-can offset short-term volatility .