What happened?
A sharp weekend crypto sell-off followed a policy shock from Washington — President Trump threatened a 100% tariff on Chinese goods — and a law‑enforcement sweep that led to custody of roughly $15 billion in Bitcoin tied to a fraud network. Liquidity thinned, forced liquidations wiped out about $19 billion of leveraged positions, and bitcoin fell below $110,000 while ether and many altcoins plunged on thin order books. DeFi and DEX activity spiked as traders scrambled, producing record one‑day liquidations, wide spreads, and a big reset in funding across futures and spot markets.
Who does this affect?
Leveraged traders and anyone using futures or margin felt it first — around 1.6 million accounts were impacted by margin calls and forced unwinds. Market makers and exchanges pulled back inventory and funding rates reset, while some retail cohorts rotated into stablecoins and ETF flows slowed. Institutional investors and custodians are watching too, because large off‑exchange holdings and enforcement actions change the available float and raise compliance and custody considerations.
Why does this matter?
The crash removed a lot of excess leverage and funding stress, which can reduce the chance of another immediate cascade but also leaves markets extra sensitive to policy headlines. If ETF inflows resume, stablecoin issuance grows, and order‑book depth improves across BTC, ETH and other leading chains, the deleveraging could set the stage for steadier gains and better market structure. Until those signals turn, volatility and headline risk will keep risk premia elevated and could sway allocations between crypto, equities, and risk‑off assets.