Core Insights - A sudden tariff announcement from U.S. President Donald Trump led to a significant selloff in global markets, particularly in the crypto sector, resulting in over $19 billion in leveraged positions unwinding within 24 hours [1] - The event highlighted the high level of leverage in crypto trading, with Bitcoin and Ethereum experiencing the largest losses, while altcoins faced even steeper corrections [3][4] Market Reaction - Over 1.6 million traders were liquidated, with nearly 87% of positions being long, indicating a strong market reaction to the tariff news [2] - Open interest in Bitcoin futures dropped by more than 30% during the selloff, reverting leverage levels to those last seen in May [5] Sentiment Shift - Funding rates turned negative across most exchanges, signaling a shift in market sentiment from optimism to caution [6] - Analysts described the situation as a "stress test" for market structure, revealing the increasing influence of derivatives and the limitations of algorithmic risk management during periods of volatility [6] Recovery Phase - By October 13, Bitcoin rebounded to above $114,000, recovering nearly 12% from the lows, while Ethereum rose to around $4,100 [7] - Spot Bitcoin ETFs experienced $420 million in inflows during the recovery, helping to stabilize prices [7] Altcoin Performance - Altcoins like Solana, XRP, and Avalanche showed modest rebounds, indicating selective risk appetite rather than a full market recovery [8] - The bounce was attributed to institutional buying and automated market makers rebuilding liquidity after the liquidations [8] Ongoing Volatility - Despite the recovery, implied volatility in Bitcoin options exceeded 50%, and futures spreads remained tight, reflecting caution among professional traders [9] - Analysts warned that a rapid buildup of leverage could lead to another significant unwind if macroeconomic conditions worsen [9]

Binance says its systems stayed stable as Trump’s new tariffs on China triggered a major crypto sell-off | Credit: Michael M. Santiago/Getty Images Key Takeaways Binance reported that its core trading systems remained fully operational during the extreme market volatility triggered by Trump’s new tariffs. The exchange acknowledged that some assets experienced temporary depegging due to sharp market fluctuations. Trump’s announcement of 100% tariffs on all Chinese imports led to a crypto market meltdo ...