Crypto Crash: $740 Billion Wiped Out as Trump's Tariffs Spark Panic

The cryptocurrency market experienced a significant crash today, with the total market capitalization plunging to $3.06 trillion from a recent high of $3.8 trillion. Major cryptocurrencies such as Bitcoin and Ethereum suffered sharp sell-offs, triggering widespread liquidations and heightened investor panic.

One of the primary catalysts behind today’s crash is President Donald Trump’s announcement of new U.S. tariffs. These include a 25% tariff on imports from Mexico and most Canadian products, and a 10% tariff on Chinese goods. These policies have rattled financial markets, with investors fearing a prolonged trade war and economic downturn. Traditional markets also reacted negatively, with the Australian dollar hitting its lowest level since the pandemic. As global financial instability increases, risk-on assets like crypto tend to suffer, leading to sharp declines.

The crypto market has been on a strong uptrend recently, with Bitcoin surpassing the six-figure mark for the first time. However, this rally left the market vulnerable to sharp corrections, especially as traders looked to lock in profits at psychological resistance levels. The inability to sustain momentum at higher price levels triggered a chain reaction of selling across the market.

The Crypto Fear and Greed Index was at 39 (Fear) at press time, a stark contrast from the Neutral 55 recorded last week. The rapid shift in sentiment suggests that investors are becoming increasingly risk-averse amid broader market uncertainties. Fear-driven market conditions have historically led to prolonged downturns as traders rush to protect capital, exacerbating the selling pressure.

The crypto market experienced an abrupt downturn, with Bitcoin dropping from its recent highs of over $100,000 to an intraday low of $91,995—a staggering drop of over 8%. Ethereum and other altcoins followed suit, with billions wiped out in minutes. According to liquidation data, over $2 billion worth of positions were liquidated in the last 24 hours, with Ethereum alone accounting for $600 million in forced liquidations. The sharp price declines triggered cascading stop-loss orders, intensifying the selling pressure.

While short-term panic has set in, evaluating whether this crash is a momentary correction or the start of a prolonged bear phase is important. The Fear and Greed Index suggests further downside risk, as investors move into risk-off mode.