What happened?
Cryptocurrencies plunged over the weekend as Trump’s tariff shock sparked a global sell-off, wiping out billions in leveraged crypto bets before markets rebounded on Monday. Bitcoin climbed about 4.5% to roughly $115,459 and Ether jumped around 11% as traders reacted to firmer rhetoric from Trump and VP Vance. The quick flip from greed to fear led to massive liquidations—reported losses topped $19.3 billion and some estimates put the true hit closer to $30 billion.
Who does this affect?
Leverage-heavy retail traders and crypto derivatives users were hit hardest, with more than 1.6 million traders liquidated across major platforms. Exchanges and market makers felt the strain from thin liquidity and algorithmic selling during off-hours, while institutional and cross-asset investors watched correlations and risk appetite shift. Broader markets also felt the shock because a potential US–China trade escalation threatens global growth, which in turn dampens demand for risk assets like crypto.
Why does this matter?
This episode highlights structural vulnerabilities in crypto—high leverage, limited liquidity, and reflexive algo selling—that can amplify shocks and create outsized volatility. That matters to markets because such flash events can spill into other asset classes, drive a flight to safety, and push funding conditions tighter for risk assets. If trade tensions re-escalate, the downside risks for crypto and global growth increase, making price swings and contagion more likely unless liquidity and risk controls improve.