Cryptocurrencies Plunge 7% as Trade Tensions Spark Global Sell-Off

Bitcoin and other cryptocurrencies experienced a sharp sell-off as trading began in Asia, reflecting a broader risk-off sentiment across global markets. Bitcoin's value dropped by approximately 7% from Sunday night to Monday morning in Singapore, reaching a low of $77,077. Ether, the second-ranked token, plummeted to $1,538, its lowest point since October 2023. This downturn coincided with escalating trade tensions, as U.S. President Donald Trump's sweeping tariffs continued to impact global financial markets. U.S. equity-index futures slumped, and the yen surged, indicating deepening turmoil throughout financial markets.

The sell-off in cryptocurrencies was significant, with about $745 million worth of bullish crypto wagers liquidated in the past 24 hours, the highest amount in nearly six weeks. This liquidation underscored the market's reaction to the escalating trade tensions and the potential for further declines. Options markets suggested that the selling pressure may continue, with key support levels for Bitcoin and Ether identified at $75,000 and $1,500, respectively. The market's resistance to the initial panic after Trump's tariff announcement had hinted at a possible decoupling from technology stocks, but Monday's selloff indicated that this resistance may be waning.

Analysts attributed the market's movements to macroeconomic factors, with the tariff-driven pullback seen as idiosyncratic rather than indicative of deeper economic issues. The tariffs were viewed as an artificially injected shock that could be reversed once the Trump administration achieved its desired concessions. However, the lack of policy support from the Federal Reserve and the Trump administration's unwavering stance on tariffs left the market vulnerable to further declines. The global economy was pushed into a state of economic warfare, with significant sell-offs in various asset classes, including equities and commodities.

The escalating trade tensions led to a systemic repricing of the global economic order. The tariffs were effectively a massive backdoor tax hike, and without fiscal offsets, the economic spiral could worsen. The market was experiencing a liquidity-driven shakeout, with no asset class safe from the sell-off. The damage seen in the market was historic, with significant market cap losses in a short period. Valuations were being mechanically compressed in real time, with high-multiple names, especially in tech, getting repriced hard as forward earnings were slashed and the market came to terms with slower growth and rising costs. Credit spreads were blowing wider by the hour, with junk bonds leading the charge, indicating default risk creeping into the system.

This market environment was not a "buy the dip" setup but a moment to get out before the building collapses. With no Fed pivot, no fiscal offset, and the White House digging in on economic warfare, this could be just the beginning of a much bigger market repricing. This was the start of a broader regime shift, not a blip or a tantrum, but a full-blown rethink of what risk assets are worth in a world where policymakers have chosen chaos over clarity. The market was in a state of uncertainty, with no immediate relief in sight from the Fed, Congress, or the White House, leaving traders bracing for further volatility and potential outflows that could rattle broader emerging markets.