Bitcoin News Today: Trade War Fears Plunge Crypto, But Dollar Weakness Could Fuel Bitcoin's Rise

Bitcoin (BTC) and broader cryptocurrency markets plunged into "Extreme Fear" sentiment following U.S. President Donald Trump's announcement of sweeping 100% tariffs on Chinese imports, triggering a historic liquidation wave and sharp price declines. The Crypto Fear and Greed Index, a key market sentiment indicator, dropped to 25 on October 10, 2025, marking the lowest level since September 2025 and signaling widespread investor panic Coingabbar^[1]. Bitcoin fell below $105,000, a 7.5% drop from its prior 24-hour high, while Ethereum (ETH) slid under $4,000 (-12.4%) as traders scrambled to offload positions amid escalating trade tensions Cointelegraph^[2].

The total cryptocurrency market capitalization fell to $3.86 trillion, down 9.1% in 24 hours, with over $19.13 billion in liquidations across exchanges like Hyperliquid, where $10.28 billion in long positions were wiped out Yahoo Finance^[3]. Altcoins were hit disproportionately, with assets like AVAX (-61%) and XRP (-62%) collapsing as thin order books amplified volatility. DeFi tokens also suffered, including World Liberty Financial (WLFI), a Trump-linked project that lost 30% of its value despite a $10 million buyback Coingabbar^[4].

Trump's tariffs, set to take effect on November 1, were framed as retaliation for China's export controls on rare earth metals and technology. The move intensified fears of a full-scale trade war, with the U.S. also imposing 25% tariffs on cars and export restrictions on key software. The immediate fallout rippled across traditional markets, with the S&P 500 and Nasdaq Composite dropping 2.3% and 4%, respectively, over five trading days CoinDesk^[5].

While the short-term outlook remains grim, some analysts see long-term bullish implications for Bitcoin. Bitwise CIO Matt Hougan argued that Trump's policy of weakening the U.S. dollar-by forcing foreign nations to reduce dollar reserves-could boost Bitcoin's appeal as an alternative reserve asset. "A weaker dollar and lower Treasury yields create a fertile environment for Bitcoin to outperform," Hougan stated, citing historical inverse correlations between Bitcoin and the U.S. Dollar Index (DXY) Crypto-Economy^[6]. Arthur Hayes of BitMEX similarly suggested that a potential yuan devaluation in response to U.S. tariffs could drive Chinese capital into cryptocurrencies, echoing patterns from 2013 and 2015 Cryptonews.com.au^[7].

Despite these views, institutional investors remain cautious. U.S. spot Bitcoin ETFs saw $4.4 billion in net inflows year-to-date, but exchange-held Bitcoin supply hit multi-year lows as traders accumulated during dips Bitwise Europe^[8]. The market's resilience, however, is underpinned by thin short-term liquidity and a lack of downside clusters below $75,000, according to Bitwise's market analysis Bitwise Europe^[9].

The path forward hinges on whether trade tensions escalate or de-escalate. If diplomatic negotiations succeed, a relief rally could follow. Conversely, prolonged tariffs may force global markets into a deflationary slowdown, further eroding the dollar's dominance and accelerating Bitcoin's adoption as a geopolitical hedge. For now, the crypto Fear and Greed Index remains in "Extreme Fear," but analysts like Benjamin Cowen of CoinGlass note that such extremes often precede sharp rebounds driven by ETF inflows and institutional demand Coinedition^[10].