Trade Tensions Trigger $350M Crypto Liquidations, Bitcoin Drops 3.5%

On April 10, 2025, the escalating trade tensions between the U.S. and China, coupled with rising tariff concerns, triggered a significant drop in the value of Bitcoin and Ethereum. This market decline resulted in more than $350 million worth of cryptocurrency liquidations. Bitcoin plummeted to $78,699, while Ethereum fell to $1,485, erasing all of its previous week’s gains. The cryptocurrency market's sensitivity to large-scale economic events was evident as traders panicked about rising trade barriers and asset disposals during the sell-off period.

The market's weakening bullish strength was highlighted when Bitcoin fell beneath its 50-day moving average, which stood at $85,785. The potential resistance point for Bitcoin was identified at $81,000, with a support level near $77,500. Ethereum's price broke down below its 200-day average at $2,820, a level not seen since 2023. The price region at $1,450 for Ethereum represents a crucial support level that could determine whether market conditions continue to decline.

Market sentiment shifted towards risk avoidance as the United States hinted at tariffs for Chinese products, including advanced technology and clean-energy products. This shift primarily affected cryptocurrencies, as investors preferred to protect their assets by purchasing bonds and gold. Bitcoin's price declined by 3.5% to $79,697, while Ethereum fell by 8.7% to $1,523. Bitcoin maintained a lower volatility rate, but Ethereum faced exposure to decentralized finance (DeFi) protocols. Traditional financial markets, tech stocks, and commodities experienced similar price drops during this period.

Bitcoin experienced more than $150 million in long position liquidations, and Ethereum exceeded $200 million in liquidations within 24 hours following the tariff announcement. Traders sold their leveraged crypto bets due to the upcoming network upgrades. Price swings became more pronounced through liquidations as traders had to sell their assets to meet margin requirements, starting an ongoing downward price effect. Both Bitcoin dropped past $79,000, and Ethereum failed to hold above $1,500 due to this market mechanism.

Market dynamics between traditional and cryptocurrency markets remain interconnected, as evidenced by the sell-off. Cryptocurrency has transitioned from being an individual asset class to adopting market trends of traditional financial instruments. Blockchain fundamentals share an equal influence with Fed policy, inflation, and tariffs on cryptocurrency pricing during short-term periods.

The price decline presents an opportunity for investors to make acquisitions, according to certain market analysts. Major market downturns generate purchasing opportunities for investors who remain committed to the long term. The long-term demand for Bitcoin exists because of its limited supply, while Ethereum enables Web3 functionality. The pricing of Bitcoin’s supply shock from the upcoming 2024 halving event depends on institutional adoption, while ETF inflows act as the main drivers for its future trajectory. The compatibility between Dencun, ongoing scalability enhancements, and the upcoming Upgrade Cycle from Ethereum may help boost developer engagement and DeFi use.

The path of cryptocurrency markets depends heavily on regulatory clarity, especially in the United States and European Union markets. Better regulatory control over stablecoins and mining operations would create new difficulties, yet favorable regulations could lead to increased bullish market sentiment. Cryptocurrencies remain vulnerable to geopolitical factors despite their decentralized philosophy, as the April 10 market crash demonstrated. A rebound for Bitcoin and Ethereum requires markets to achieve a clear understanding of tariffs, interest rate policies, and regulatory guidelines.