Trump’s new tariffs sparked a $400B crypto crash. | Credit: Spencer Platt/Getty Images.
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Key Takeaways
The crypto market saw its largest liquidation event of 2025, with $2.2 billion wiped out from the derivatives market.
Trump’s new tariffs sparked a panic sell-off, erasing $400 billion from the crypto market cap.
Over 700,000 traders were liquidated in a rapid, cascading market crash.
The crypto market witnessed a brutal shakeout on Monday, Feb. 3, as Donald Trump’s aggressive trade tariffs set off a chain reaction of panic selling, culminating in the largest liquidation event of 2025.
The sell-off wiped $400 billion from the total crypto market cap, triggering liquidations that surpassed the historic crashes of the COVID-19 crisis and the FTX collapse.
Over $2.2 billion in leveraged positions were wiped out in a matter of hours, sending shockwaves through the industry.
Trump’s Tariffs Set Off $400 Billion Crypto Bloodbath
Trump’s Feb. 1 announcement of sweeping new tariffs—25% on imports from Mexico and Canada and 10% on goods from China—is widely seen as the first shot in a new global trade war. The move rattled financial markets, particularly cryptocurrencies.
Ryan Lee, chief analyst at Bitget Research, told CCN that investors’ fears of a retaliatory trade war sent shockwaves through riskier asset classes, including crypto.
“Retaliatory measures promised by Canada, Mexico, and China have further heightened investor anxiety, prompting a shift away from riskier assets, including cryptocurrencies. While Bitcoin has historically been viewed as a hedge against traditional market volatility, its recent performance highlights a growing sensitivity to global economic events.”
Lee added that the sell-off underscores how geopolitical uncertainty and policy decisions are increasingly shaping crypto market behavior.
Crypto’s close ties to Trump’s presidency have also amplified market reactions.
With the administration openly supporting digital assets, crypto has become more exposed to broader macroeconomic shifts tied to Trump’s policies.
This was evident last month when a market downturn coincided with the launch of DeepSeek, a Chinese AI chatbot with no direct crypto ties, yet still managed to trigger a sector-wide sell-off.
According to Coinglass, 729,073 traders were liquidated in just 24 hours, with total liquidations reaching $2.23 billion.
The most significant single liquidation order happened on Binance, involving an ETH/BTC trade worth $25.64 million.
Crypto liquidation Heatmap. Source: Coinglass
Long traders bore the brunt of the collapse, accounting for $1.88 billion of total liquidations. The aggressive sell-off also highlighted how overleveraged the market had become, driven by optimism surrounding Trump’s pro-crypto stance.
Ethereum (ETH) traders took the biggest hit, losing over $600 million in leveraged positions—surpassing even Bitcoin (BTC) traders, who saw $409 million in liquidations.
The market carnage resembled the COVID-era crash, where a violent sell-off preceded a historic rally. Many analysts believe the crypto market could rebound once the dust settles on Trump’s trade war. However, with tensions escalating, the market may have to brace for more turbulence ahead.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
