Politics

Trump’s Tariff Threat Triggers Crypto Crash: How Geopolitics Exposed $18 Billion in Market Leverage

Trump’s tariff threat caused a $18.28B crypto sell-off, hitting Bitcoin, Ether, and Solana hard.

October 11, 2025, 5:21 PM

Close-up view of a dark digital stock market screen showing numerous assets with prices and steep negative percentage changes in red and orange.

This detailed image shows a financial data screen dominated by red and orange numbers, reflecting significant price drops and a severe market crash. By MDL.

Executive Summary

President Trump’s threat to impose an additional 100% tariff on Chinese imports precipitated a historic $18.28 billion cryptocurrency sell-off, described as the “largest liquidation event in crypto history.”

Bitcoin, ether, and solana were among the most severely affected digital currencies, experiencing significant liquidations and price drops, which coincided with a broader market downturn in the Nasdaq and S&P 500.

The dramatic sell-off marks a shift from Trump’s recent pro-crypto policies, which had previously boosted the market, and occurred amid escalating trade tensions following China’s intensified export restrictions on rare earth minerals.

The Story So Far

The recent cryptocurrency sell-off was triggered by President Donald Trump’s threat of 100% tariffs on Chinese imports, a move that followed China’s escalation of export restrictions on critical rare earth minerals and marked a significant shift from Trump’s previously pro-crypto stance. This earlier favorable approach, which included allowing digital assets in 401(k) plans, had contributed to substantial market gains, highlighting the market’s sensitivity to policy and geopolitical developments and its inherent volatility due to significant leverage.

Why This Matters

President Trump’s threat of 100% tariffs on Chinese imports triggered a historic $18.28 billion cryptocurrency sell-off, exposing significant leverage and the extreme volatility of digital asset markets to geopolitical developments. This event also underscored the interconnectedness of global financial markets, as the crypto downturn coincided with broader stock market declines, demonstrating how political rhetoric and trade tensions can quickly impact diverse investment sectors despite previous pro-crypto policy shifts.

Who Thinks What?

Market analysts and observers believe President Donald Trump’s threat of a 100% tariff on Chinese imports directly caused a historic cryptocurrency sell-off, exposing significant leverage within the volatile market.

President Donald Trump’s tariff threat against China was a retaliatory measure following China’s decision to intensify export restrictions on critical rare earth minerals.

President Donald Trump’s recent threat to impose an additional 100% tariff on imports from China precipitated a historic cryptocurrency sell-off late Friday, resulting in an estimated $18.28 billion in liquidations across digital assets. This event, described by data analysis platform CoinGlass as the “largest liquidation event in crypto history,” exposed significant leverage within the volatile cryptocurrency market.

Market Impact and Key Cryptocurrencies

Bitcoin, ether, and solana were among the most severely affected digital currencies following Trump’s announcement. In the 24 hours leading up to the sell-off, approximately $5 billion of bitcoin, $4 billion of ether, and $2 billion of solana were liquidated, according to CoinGlass data. Bitcoin’s price dropped nearly 10% in five days, while ether and solana saw declines of 14.2% and almost 20% respectively from their Friday prices.

The cryptocurrency losses coincided with a broader market downturn, as both the Nasdaq and S&P 500 indices experienced their steepest declines in six months on Friday. This indicated a wider market reaction to the renewed trade tensions and the perceived risk introduced by the tariff threats.

Trump’s Shifting Stance on Crypto

The sell-off marks a significant shift, as cryptocurrencies had previously experienced substantial gains under President Trump’s administration this year. Trump had notably pivoted from his earlier dismissal of bitcoin as “based on thin air” to engaging with crypto enthusiasts at conventions, launching his own meme coin, and promising a strategic crypto reserve.

Further bolstering the crypto market, Trump recently issued an executive order that allowed digital assets to be included in 401(k) plans. This policy change contributed to bitcoin soaring to a record high of $124,000 just last week, highlighting the impact of policy decisions on market sentiment.

Escalating Trade Tensions

The re-escalation of trade tensions between Washington and Beijing followed China’s decision on Thursday to intensify export restrictions on critical rare earth minerals. This move by China appears to have prompted President Trump’s retaliatory tariff threat, setting the stage for the market’s reaction.

Market Volatility Amidst Geopolitical Shifts

The dramatic cryptocurrency sell-off underscores the inherent volatility of digital asset markets, particularly when influenced by high-stakes geopolitical developments and policy announcements. President Trump’s tariff threat against China, coming after a period of pro-crypto policy, served as a stark reminder of the interconnectedness of global trade, political rhetoric, and financial market stability.