Bitcoin News Today: Trump Tariffs Expose Crypto's Leverage Crisis: $19B Liquidated in Historic Collapse

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The cryptocurrency market reeled on October 10, 2025, as U.S. President Donald Trump announced a sweeping 100% tariff on Chinese imports, triggering one of the largest liquidation events in crypto history. Bitcoin plummeted over 10% to $104,782, while Ethereum and other major altcoins followed suit, erasing roughly $19.2 billion in leveraged positions within hours, according to data from CoinGlass. The selloff mirrored a broader risk-off sentiment across global equities, with the S&P 500 dropping 2%-its worst single-day performance in six months.

Trump's announcement, posted on his Truth Social platform, cited Beijing's new export restrictions on rare earth minerals and critical software as justification for the retaliatory tariffs, effective November 1. The move escalated trade tensions that had been simmering since May, when the U.S. and China had reached a tentative trade agreement. "This is the largest liquidation event in crypto history," CoinGlass stated, noting that over 1.6 million traders were liquidated, with Hyperliquid reporting $1.2 billion in losses from 6,300 wallets.

The speed and scale of the collapse outpaced even the March 2020 pandemic crash, with some analysts comparing the volatility to the 2022 FTX collapse. Bitcoin's drop to $103,000 marked a 12% decline within hours, while Ethereum fell 15% to $3,742.88. The total crypto market capitalization contracted by $200 billion, according to CoinGecko, as traders rushed to stablecoins and cash.

Analysts attributed the crash to a combination of excessive leverage, thin liquidity, and algorithmic amplification. "This wasn't just a panic-it was a structural failure of leverage," said Zaheer Ebtikar, CIO of Split Capital. Coinglass data revealed that $5 billion in Bitcoin, $4 billion in Ethereum, and $2 billion in Solana positions were liquidated within 24 hours. Binance and Coinbase reported system outages as traders scrambled to exit positions, exacerbating slippage and bid-ask spreads.

The event exposed vulnerabilities in crypto's market structure, particularly in altcoins, where inflated market caps masked weak order books. "Liquidity isn't what it appears," said Ram Ahluwalia of Lumida Wealth. The yen carry trade unwind-a sophisticated mechanism where leveraged investors borrowed low-cost yen to fund higher-yielding assets-also contributed to the cascade, triggering margin calls across global markets.

While the crash was initially framed as a geopolitical shock, on-chain data revealed a subplot: a single trader reportedly profited $160 million by shorting Bitcoin and Ethereum just before the announcement. The trader, identified by wallet activity on Hyperliquid, opened $1.1 billion in leveraged short positions hours before Trump's post. Though unverified, the timing fueled speculation about insider knowledge, with some pointing to a 30% pre-crash drop in the WLFI token-a Trump-branded meme coin-as an early signal.

However, most experts downplayed the idea of a "predictable" crash. "This was a chain reaction, not a premeditated strike," said Bob Loukas, a prominent trader. Algorithmic trading systems, rather than foresight, likely amplified the selloff once initial orders triggered automated deleveraging.

Despite the carnage, many analysts argue the crash could mark a healthier reset for crypto. "This purge of leverage was necessary," said Lark Davis, a crypto analyst, noting that excessive positioning had made markets fragile. The selloff pushed weak hands out of the market, leaving long-term holders to reaccumulate at lower levels.

Key indicators to watch include on-chain flows, perpetual futures funding rates, and China's response to the tariffs. For now, the market remains volatile, with Bitcoin hovering near $110,000 and Ethereum testing $3,800 levels.

The next phase of the market will hinge on broader economic and geopolitical factors. While Trump's tariffs may have been a "bargaining chip" rather than a permanent policy shift, further trade escalations, interest rate decisions, or regulatory actions could dictate the trajectory.

For now, the October 2025 crash will be remembered as a defining stress test for the crypto bull market-a moment that separated speculation from strategy.

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Source: [1] Did Trump's Tariff Trigger A Crypto Purge Or Just A Panic? - Forbes (https://www.forbes.com/sites/digital-assets/2025/10/11/did-trumps-tariff-trigger-a-crypto-purge-or-just-a-panic/)

[2] Trump's new 100% tariffs on China triggered a $19 billion crypto ... (https://www.cnn.com/2025/10/11/business/trump-tariffs-crypto-selloff)

[3] Crypto crash: Bitcoin plummets after Trump imposes 100 per cent ... (https://www.independent.co.uk/news/business/crypto-bitcoin-crash-trump-china-tariff-b2843621.html)

[4] Crypto Crash: Bitcoin (BTC) Down 10%, ETH, XRP, SOL in Freefall ... (https://www.coindesk.com/markets/2025/10/10/bitcoin-crashes-below-usd110k-cryptos-in-freefall-on-further-trump-tariff-on-china)

[5] Over $19 billion liquidated in worst crypto crash since COVID (https://www.thestreet.com/crypto/markets/over-19-billion-liquidated-crypto-crash-trump-tariffs)

[7] The October 2025 Market Crash: A Historic Liquidation Event (https://blog.millionero.com/blog/the-october-2025-market-crash-a-historic-liquidation-event)

[9] Crypto Plunges After Trump Confirms 100 Percent China Tariff (https://blog.bitunix.com/en/trump-china-tariff-crypto-market-crash/)

[11] Trump Crashes Crypto Markets With 100% Tariff On ... (https://beincrypto.com/trump-china-tariff-triggers-200-billion-crypto-crash/)