Crypto Market Crashes Billions on China Tariff Shock but Begins to Stabilize

The cryptocurrency market was thrown into chaos Saturday as billions of dollars were wiped out in a matter of hours, triggering one of the most severe single-day selloffs in recent history. But after the panic, signs of stabilization are beginning to emerge.

The crash came fast on the heels of the Biden administration’s announcement of sweeping new tariffs on Chinese tech imports, spooking global markets and sending already volatile crypto investors into full-scale liquidation mode.

“The crypto market reacted in a more extreme way than the stock market because it’s 24/7,” said Joshua Duckett, director of investigations at a leading crypto forensic firm. “There was a market downturn in multiple cryptocurrencies over the past 24 hours… primarily due to market news and its ripple effects.”

Bitcoin, the largest and most widely-traded digital asset, plunged below $110,000, while Ethereum and other top-tier tokens dropped more than 20% in just a few hours. For investors operating on borrowed money, the impact was devastating.

“Some people lost hundreds, thousands, millions the total in terms of liquidations extends into the billions,” Duckett said.

At the heart of the crash? Leverage. Traders who had borrowed heavily to bet on rising crypto prices were forced to liquidate en masse, triggering a violent chain reaction. As each leveraged position was closed, it drove prices lower, which in turn triggered more liquidations.

“People can borrow against what they have and leverage up to extreme amounts 100x essentially in crypto,” Duckett explained. “And so when those positions are liquidated, a large move either to the upside or the downside happens. In this case, the downside.”

This “cascading liquidation spiral” snowballed across exchanges, with automated sell-offs accelerating the crash well beyond what traditional stock markets experienced following the tariff news.

But the bleeding may be slowing. “It seems to have essentially stabilized,” Duckett said late Saturday. “Right now, we’re kind of in a rebound-to-stable position. Tomorrow is a new day.”

While the crypto market remains volatile, analysts are watching closely to see if support levels hold or if further panic selling resumes in the coming days. Much will depend on how traditional markets react Monday and whether further geopolitical or economic shocks follow.

Still, the episode is a sharp reminder of the risks embedded in crypto particularly when tied to high-risk leverage.

“The number one rule is not to invest more than you can lose but that’s not specific to crypto, that’s investing in general,” Duckett cautioned. “Additionally, researching what one is investing in is also a key part of it.”

This weekend’s crash is far from the first and likely not the last in crypto’s short but volatile history. But with over $2 trillion still sitting in digital assets globally, one thing is clear: the crypto market isn’t going away. And neither are the risks that come with it.

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