Ethereum News Today: Trump Tariffs Trigger Crypto's $19B Liquidation Domino Effect

The global cryptocurrency market experienced one of its largest liquidation events in history, with over $19 billion in leveraged positions wiped out in a single 24-hour period, according to data from Coinglass and multiple exchange reports. The crash, triggered by U.S. President Donald Trump's announcement of a 100% tariff on Chinese goods, erased $670 billion in market value and pushed Bitcoin below $105,000 before rebounding to $112,000. Ethereum (ETH) and altcoins suffered even steeper declines, with some tokens dropping as much as 90% on Binance.

The liquidations were driven by cross-margined collateral defaults on centralized exchanges (CEXs), a phenomenon highlighted by BitMEX co-founder Arthur Hayes. He attributed the sell-off to cascading forced liquidations, where leveraged long positions were automatically closed as prices fell below maintenance margins. "The forced liquidation of collateral linked to cross-margined positions triggered widespread volatility," Hayes noted, adding that opportunistic traders exploited the chaos with aggressive "stink bids" to capitalize on the downturn. The event marked the largest single-day liquidation in crypto history, surpassing the $8.6 billion wiped out during Bitcoin's 2021 crash.

Binance and Bybit accounted for 71% of total liquidations, with Binance reporting $458 million and Bybit $376 million in closed positions. Bitcoin led the losses with $448 million in liquidated longs, followed by Ethereum at $304 million. Smaller tokens like Solana (SOL), Dogecoin (DOGE), and XRP also faced significant outflows, with combined liquidations exceeding $100 million. The crash coincided with heightened geopolitical tensions, including Israel's military strike on Iran, which further exacerbated market panic.

The macroeconomic context played a critical role. Trump's tariff policy reignited fears of a U.S.-China trade war, triggering a global risk-off sentiment. Analysts linked the sell-off to inflationary pressures and liquidity constraints, as central banks may tighten monetary policy in response to rising import costs. However, Hayes remains bullish on Bitcoin's long-term prospects, predicting a Fed pivot in 2026 and a potential bull run. "April this year was a great buying opportunity for those with steel nerves and spare cash," he stated, referencing the prior year's crash.

The event underscored the fragility of leveraged trading in crypto. Over 1.6 million traders were liquidated in 24 hours, with one whale experiencing a $36.4 million loss on Ethereum positions. DeFi platforms also faced cascading liquidations, as Ethereum's price volatility triggered the forced closure of overcollateralized loans. Exchanges like Binance, Coinbase, and Kraken reported technical outages during the turmoil, though operations were restored within hours.

Market reactions varied. While Bitcoin's 10% drop over 24 hours signaled short-term pain, institutional investors began to show renewed interest. The U.S. Office of the Comptroller of the Currency's recent approval of bank custody for crypto assets added to a stabilizing macro environment. Dr. Sean Dawson of Derive.xyz noted that Bitcoin's volatility had stabilized at 42%, while Ethereum's surged to 80%, indicating potential for explosive movements.

Hayes' bearish stance, however, contrasts with broader optimism. He sold $13 million in ETH, ENA, and PEPE, shifting to USDC as a hedge against further declines. "No major economy is expanding credit fast enough to boost nominal GDP," he warned, predicting Bitcoin could test $100,000 and Ethereum $3,000. Conversely, the recent 90-day tariff rollback between the U.S. and China spurred a modest 1% rally in crypto market capitalization, with Bitcoin rebounding to $104,100 and Ethereum to $2,500.

The crash has intensified debates about regulatory oversight. With $16.7 billion in longs liquidated, stablecoins like Ethena's USDe briefly dipped below $1, highlighting systemic risks in derivatives markets. Analysts emphasized the need for robust risk management, including stop-loss orders and diversified portfolios, to mitigate future shocks.