Crypto's Dual Challenge: Hyperliquid's Slide and Tariff Woes Test Resilience

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The cryptocurrency market experienced a significant selloff in late 2025, driven by a confluence of factors including the collapse of Hyperliquid’s dominance in on-chain perpetual trading and escalating geopolitical tensions affecting Chinese Bitcoin miners. Prices for major assets like Bitcoin (BTC) and Ethereum (ETH) fell sharply, with BTC dropping from $52,345 to $50,456 within hours of a 60% probability of a U.S. government shutdown being cited by The Kobeissi Letter. This volatility underscored the sector’s sensitivity to macroeconomic developments, particularly those involving U.S. fiscal stability.

Hyperliquid, once commanding 71% of the on-chain perpetuals market, saw its share plummet to 38% by late September 2025, as competitors like Lighter and Aster captured 16.8% and 14.9% of the market, respectively. The decline was attributed to aggressive competition and strategic moves such as Aster’s 300x leverage offering on Hyperliquid’s HYPE token, which intensified market fragmentation. Despite this, HYPE’s price held firm at $35.83, supported by whale accumulation and a $17.5 million USDC deposit into Hyperliquid’s platform. However, the looming $12 billion token unlock in November sparked debates over its potential to destabilize the token’s value, with some proposing a 45% supply reduction to mitigate downward pressure.

Chinese Bitcoin miners faced renewed challenges as U.S. tariffs on mining hardware surged to 145%, sharply increasing operational costs. Bitmain, Canaan, and MicroBT, which control over 90% of the global mining equipment market, shifted production to the U.S. to circumvent tariffs, but domestic manufacturing costs remained high. This shift mirrored earlier supply chain adjustments following China’s 2021 crypto ban, which had forced miners to relocate to countries like Russia and Canada. Despite these efforts, China retained 15% of the global Bitcoin hashrate, leveraging its renewable energy infrastructure and strategic repositioning in Inner Mongolia.

The U.S.-China trade war exacerbated market uncertainty, with Chinese miners struggling to absorb the $14,500 tariff premium on $10,000 ASICs. This, combined with rising liquidations—$631 million in a single day—pushed Bitcoin below $112,000, triggering a $200 billion market cap correction. Analysts noted that the price decline reflected both profit-taking and heightened leverage unwinding, with technical indicators suggesting a consolidation phase ahead.

Looking forward, the crypto sector faces a dual challenge: Hyperliquid’s market share erosion and the long-term impact of U.S. tariffs on Chinese miners. While regulatory clarity in the U.S. and potential reductions in Trump-era tariffs could stabilize prices, the industry’s reliance on Chinese hardware and the $12 billion unlock present ongoing risks. For now, the market remains in a precarious balancing act between innovation-driven optimism and macroeconomic headwinds.