Crypto Crash: $2B Liquidated as TradFi and Trade War Fears Strike

The crypto market experienced a significant crash on Feb. 3, with over $2 billion in cryptocurrency liquidated within 24 hours. Wintermute CEO Evgeny Gaevoy attributed this event to traditional finance (TradFi) activities, rather than industry participants.

The crash occurred following U.S. President Donald Trump's signing of an executive order imposing import tariffs on goods from China, Canada, and Mexico. This event, along with others like DeepSeek, directly influenced the crypto market, according to Gaevoy.

Analysts also pointed to macroeconomic concerns over a potential global trade war as a contributing factor to the crypto market crash. Ryan Lee, chief analyst at Bitget Research, stated that the significant downturn was largely driven by escalating concerns over a potential global trade war following Trump's announcement.

Following the market correction, some traders alleged that large crypto firms deliberately sold off assets to trigger a market crash and buy at lower prices. However, Gaevoy denied these allegations, stating that Wintermute does not manipulate prices or engage in illegal activities.

Market makers, which provide liquidity to crypto markets, can contribute to selling pressure during market downturns. In August 2024, five of the top market makers sold a total of 130,000 Ether (ETH) worth $290 million while Ether's price crashed from $3,000 to below $2,200. Wintermute sold over 47,000 ETH, followed by Jump Trading (36,000 ETH) and Flow Traders (3,620 ETH), according to blockchain analytics firm Scopescan.