Bitcoin News Today: Trump's Tariffs and Government Shutdown Trigger $16B Crypto Liquidations

The global crypto market faced a $16 billion liquidation event in leveraged long positions following U.S. President Donald Trump's announcement of 100% tariffs on Chinese imports, triggering a sharp sell-off in risk assets. Bitcoin (BTC) and Ethereum (ETH) plummeted by over 10% and 15%-30%, respectively, while the total crypto market cap fell to $3.87 trillion. The sell-off, which accelerated in Asia morning hours, was exacerbated by the U.S. government shutdown, which delayed key economic data and heightened macroeconomic uncertainty .

The liquidation surge was concentrated in long positions, with $16.7 billion of the $19.1 billion in liquidations attributed to longs. Ethena's USDe stablecoin briefly dipped to $0.9996, a rare deviation from its $1 peg, highlighting stress in derivatives markets. The Ethena team stated that minting and redemptions remained operational, though the stablecoin's overcollateralization increased due to unrealized gains from short positions .

The sell-off followed a record $9.72 trillion in combined spot and derivatives trading volume in August 2025, the highest monthly total of the year. Gate.io emerged as a major player, with trading volume surging 98.9% to $746 billion. Open interest on centralized derivatives platforms rose 4.92% to $187 billion, reflecting heightened speculative activity before the downturn .

Analysts attributed the volatility to renewed U.S.-China trade war fears and macroeconomic risks. Trump's tariff threats reignited concerns over global trade tensions, while the government shutdown disrupted data releases, leaving markets without critical indicators. The Nasdaq and S&P 500 fell by 3% and 2.3%, respectively, as risk-off sentiment spread across asset classes .

Liquidation data underscored the severity of the downturn. Over $700 million in leveraged positions were liquidated in 24 hours, with Bitcoin alone seeing $160 million in losses. Altcoins like Solana (SOL), XRP, and Dogecoin (DOGE) also faced significant sell-offs, with combined liquidations exceeding $900 million. More than 210,000 traders were affected, and the largest single liquidation order reached $15.49 million on Hyperliquid .

Market participants noted that corrections after extended rallies are typical, but the intensity of liquidations amplified the downturn. Michaël van de Poppe, a crypto analyst, suggested the current pullback could present dip-buying opportunities. However, broader macroeconomic concerns, including AI sector volatility and delayed regulatory clarity for altcoin ETFs, kept sentiment cautious .

The liquidation event also highlighted vulnerabilities in synthetic stablecoins and staking derivatives. BNSOL and WBETH experienced price swings due to liquidity imbalances, prompting Binance to revise its index update protocols. Meanwhile, arbitrage strategies became critical in stabilizing markets during the crisis, as traders exploited price discrepancies across exchanges .

Sources:

[1] Crypto Price Drop Continues: $16B in Longs Liquidated as BTC (https://www.coindesk.com/markets/2025/10/10/usd16b-in-longs-liquidated-as-wall-street-sell-off-extends-btc-eth-broader-crypto-market-meltdown)

[2] Total Crypto Trading Volume Hits Yearly High of $9.72T (https://www.coindesk.com/markets/2025/09/09/combined-spot-and-derivatives-trading-volume-surged-7-58-to-9-72-trillion-in-august)

[4] Crypto Liquidation Today Hits $700M as Market Faces Extreme Volatility (https://coinpedia.org/news/crypto-liquidation-today-hits-700m-as-market-faces-extreme-volatility/)

[11] The 2025 Crypto Market Crash and the Search for Stability (https://cryptorobotics.ai/news/analysis/2025-crypto-market-crash-stability-strategies/)