Bitcoin Plunges 10.25% as Tariffs Spark $1B Liquidation Frenzy

Bitcoin experienced a dramatic plunge, dropping by $9,000 overnight as the crypto market faced a liquidation frenzy exceeding $1 billion. This sudden downturn was triggered by escalating trade tensions, with the U.S. President announcing sweeping tariffs on nearly all major trading partners late Friday. The tariffs sparked a wave of liquidations, with over 441,000 traders affected within a 24-hour period. Long positions accounted for the majority of the liquidations, totaling $1.21 billion, with Bitcoin alone seeing $401.31 million in long-side liquidations and Ethereum contributing $341.82 million.

The most significant single liquidation order, valued at $16.38 million, occurred on a major cryptocurrency exchange’s perpetual contract. The top five assets by liquidation volume included Bitcoin, Ethereum, Solana, XRP, and Dogecoin. This market turmoil coincided with broader financial instability, as the S&P 500 Futures Index experienced a 10% drop over the weekend, following back-to-back daily losses exceeding 4% on Thursday and Friday. This decline is among one of the steepest two-day drops in the index's history.

The liquidation heatmap revealed concentrated pressure on Bitcoin and Ethereum, though altcoins such as XRP, Solana, and Dogecoin also faced significant drawdowns. Bitcoin's 24-hour price declined by 10.25%, Ethereum fell by 19.84%, and most major altcoins posted double-digit losses. The data suggests that the sell-off was predominantly driven by long positions, with short liquidations remaining comparatively minimal.

This pullback marks a significant reversal for Bitcoin, which had peaked above $109,000 in January following the President’s reelection and inauguration. The cryptocurrency has now reverted to levels last seen under the previous administration. Bitcoin has a strong resistance level around $73,000, which has been advocated as the local bottom of a sustained bull run. However, the unprecedented tariffs and global pressure have created a black swan event that technical analysis could not foreshadow.

As geopolitical tensions continue to rise, digital asset markets are now repricing risk in tandem with traditional equities. The correlation between Bitcoin and traditional financial markets has become more pronounced, reflecting the interconnected nature of global economies. This event underscores the sensitivity of cryptocurrencies to macroeconomic factors and the potential for significant volatility in response to geopolitical developments.