Bitcoin News Today: Trump's Trade War Threats Trigger Crypto's 'Nuclear' Crash, S&P 500 Shaken

The cryptocurrency market experienced a dramatic collapse in October 2025, triggered by escalating U.S.-China trade tensions and a series of policy announcements by President Donald Trump. Bitcoin (BTC) and other major digital assets plummeted amid renewed fears of a global trade war, with the total market capitalization of cryptocurrencies dropping from $4.27 trillion to $4.10 trillion within hours Beincrypto^[6]. The crash was precipitated by Trump's public threats to impose a 100% tariff on Chinese imports and export controls on critical technologies, sparking a "risk-off" selloff across global financial markets Coinotag^[5].

Bitcoin, which had traded near $123,000 in early October, fell below $110,000 in just 72 hours, erasing $1.2 trillion in market value. Ethereum (ETH) and altcoins suffered even sharper declines, with Ethereum dropping 16% to $3,700 and altcoins like Solana (SOL) and XRP losing 20%-30% of their value. Over $770 million in leveraged positions were liquidated within 24 hours, with long positions accounting for $613 million of the losses The Coinomist^[8]. The sell-off was exacerbated by thin liquidity and concentrated leverage, particularly on exchanges like Hyperliquid, where a single $11.6 million BTC/USD position was liquidated The Coinomist^[8].

The collapse was linked to broader macroeconomic uncertainties, including the Federal Reserve's delayed rate decision due to a government shutdown and persistent inflation. Analysts noted that Trump's tariffs on Chinese rare earth materials and technology exports heightened fears of supply chain disruptions, further eroding investor confidence in risk assets Coinotag^[5]. The market reaction mirrored the 2020 pandemic crash, with traders describing the volatility as a "nuclear-level event" Coinotag^[5].

Stablecoins, which had previously served as a buffer during market downturns, also faced strain. While the content did not explicitly reference USDE losing its peg, the collapse highlighted vulnerabilities in stablecoin systems. The total stablecoin supply had surged to $278 billion by mid-2025, but regulatory clarity and reserve transparency remained contentious issues . The crisis underscored the growing interconnectedness between crypto and traditional markets, as the S&P 500 also erased $1.2 trillion in value within 40 minutes of Trump's announcement Techopedia^[9].

Institutional and retail investors adopted defensive strategies, with many shifting to stablecoins, gold, and inverse derivatives to mitigate downside risk. Gold prices, which had already surged to $4,000 per ounce, saw renewed inflows as a hedge against currency debasement CNBC^[3]. Meanwhile, crypto hedge funds and proprietary trading firms highlighted the need for disciplined risk management, including reduced leverage and dynamic stop-loss orders Coinspeaker^[7].

The crash has reignited debates over regulatory frameworks, with European regulators advancing the Markets in Crypto-Assets (MiCAR) rules while the U.S. administration pursued a deregulatory approach Ju.com^[4]. Experts warned that without systemic safeguards, future volatility could intensify, particularly as institutional adoption of tokenized assets and AI-driven trading strategies accelerates .