Bitcoin experienced a sharp decline following U.S. President Donald Trump's announcement of a 100% tariff on Chinese imports. This move, a retaliation for China's export controls on rare earth metals, triggered a broad sell-off in the crypto market, erasing nearly $280 billion in value. The price of Bitcoin fell below $110,000, marking the steepest one-day decline of 2025. Ethereum also dropped 16% to below $3,700, and altcoins like Solana and XRP fell even further. The total cryptocurrency market capitalization plummeted from $4.25 trillion to $4.05 trillion, with leveraged traders liquidating $6.5 billion in positions.
The tariff announcement, effective November 1, exacerbated existing trade tensions between the U.S. and China. Trump described China as "hostile" and warned of additional countermeasures, including export controls on critical software. This triggered a global "risk-off" flight to safety, with the S&P 500 and Dow Jones indices also collapsing.
Technical analysis showed Bitcoin breaking below key support levels, signaling intense selling pressure and panic liquidations. Analysts noted that the decline mirrored previous macroeconomic downturns but emphasized its speed and scale as the worst single-day correction of 2025. Overlapping factors, including crypto options expiries and declining ETF inflows, further exacerbated the market reaction. On-chain data revealed that long-term holders and whales were booking profits as institutions reduced risk exposure.
The situation is compounded by the fact that the U.S. government is currently in a shutdown, which has entered its 10th day. Agencies like the Securities and Exchange Commission (SEC) are operating with limited staff, causing delays in normal review and approval processes, including those related to cryptocurrency filings.
Some analysts believe that the underlying issues have been present for months, with global markets buoyed by easy liquidity, speculative AI bets, and an overconfident belief that tech stocks could only increase. The IMF and Bank of England had previously warned that AI hype and overvalued equities could lead to an "abrupt correction". Crypto markets remain overextended, with traders using high margin and leverage to chase upside.
While Bitcoin is often seen as a hedge against geopolitical uncertainty, the immediate response indicated traders prioritizing liquidity and stability over risk assets. The dollar's decline underscored broader macroeconomic concerns. Gold prices rose more than 1% on the day, signaling a flight to safety.
Despite the current downturn, some analysts suggest that this could be a good entry point for investors looking to get into Bitcoin. However, the near-term future of Bitcoin and the broader crypto market remains uncertain, as it is likely to be heavily influenced by developments in the trade war and the overall global economic climate.
