A perfect storm of factors led to a significant crash in the cryptocurrency market on Friday, resulting in $19 billion in liquidations and sending Bitcoin below $110,000. The dramatic event has sparked debate about the primary causes, with potential factors including President Trump's tariff threats against China, over-leveraged positions, and exchange vulnerabilities.

President Trump's announcement of a potential 100% tariff on Chinese imports sent shockwaves through global markets. The announcement exacerbated existing fears of a renewed trade war, triggering a sell-off in both traditional financial markets and the cryptocurrency sector. The Nasdaq-100, S\&P 500, and Dow Jones Industrial Average all experienced declines on Friday, with Bitcoin outpacing them on the downside.

However, some analysts argue that the crypto market's woes began even before Trump's tariff announcement. Data indicates that crypto prices started falling earlier in the day, suggesting other factors were at play. A large trader, or "whale," opened substantial short positions on Binance, a major crypto exchange, further contributing to the downward pressure.

The scale of liquidations points to excessive leverage within the crypto market. The $19 billion in liquidations doesn't represent direct investor losses, but rather the forced closure of leveraged positions. This liquidation event was nine times larger than any previous one. Approximately $16.6 billion came from long positions, versus only $2.4 billion from short positions. The high ratio exposed the dangerously one-sided market positioning. Over 1.6 million traders were affected.

Binance's collateral system also appears to have played a role in the crash. An analyst pointed out a flaw in Binance's system, which priced certain assets using internal market data instead of independent oracles.

Altcoins experienced even more severe drops than Bitcoin. Litecoin, Toncoin, and Dogecoin saw their values plummet by 51%, 41%, and 39% respectively. The relatively smaller order books for altcoins compared to Bitcoin mean that price impacts are magnified when forced liquidations begin.

While the market has partially recovered, the crash serves as a reminder of the volatility and risks associated with cryptocurrency trading. The incident exposed vulnerabilities in exchanges and risk management. However, decentralized exchanges held up well under pressure. Some experts believe the crash served as a "market reset," cleansing excessive speculation and leverage.