ChainTech Africa

May 23, 2025 – Global Crypto Desk

The cryptocurrency market was rocked Thursday evening after former U.S. President Donald Trump reignited trade war fears with renewed threats of sweeping tariffs on Chinese goods, triggering a sharp selloff that wiped out over $300 million in leveraged positions across major exchanges.

The liquidations, predominantly from long positions, suggest many traders were caught off guard by the sudden geopolitical tension and the ripple effect it had across risk assets—including crypto.

Tariff Talk Sparks Rapid Unwind

Trump, speaking at a campaign rally in Ohio, proposed a 60% tariff on all Chinese imports should he return to office, citing what he called “economic aggression” by Beijing. The comments sent a chill through global markets, pushing equities and crypto into the red within hours.

Bitcoin (BTC) fell more than 4% in the immediate aftermath, dipping below $62,000 before recovering slightly. Ethereum (ETH) dropped over 5%, while altcoins with higher beta, such as Solana (SOL) and Avalanche (AVAX), saw even steeper losses of up to 9%.

According to data from Coinglass, over $300 million in crypto positions were liquidated within a 12-hour window—more than 80% of which were longs. Binance, OKX, and Bybit recorded the highest levels of forced liquidations.

Leverage Comes Back to Bite

The rapid increase in liquidations highlights the risks of aggressive leverage in a market still highly sensitive to macro headlines.

“Retail bulls got flushed out,” said Alex Reinhardt, head of derivatives at BlockRoots Research. “We’ve seen a build-up in open interest and funding rates climbing in the past week, indicating a strong bias toward upside. Trump’s tariff bombshell popped that bubble.”

On-chain data also showed a spike in exchange inflows, suggesting traders were moving assets to exchanges to cover margin calls or exit positions entirely.

Macro Meets Crypto—Again

This week’s events are a stark reminder that crypto markets, once considered isolated from traditional economic pressures, are now deeply entangled with macro developments. With interest rates still elevated and global trade tensions resurfacing, digital assets are behaving more like high-risk tech stocks than decentralized safe havens.

“Investors are realizing that Bitcoin doesn’t exist in a vacuum,” said Janet Lin, a macro strategist at Argo Analytics. “Geopolitical threats, inflation outlooks, and monetary policy all impact sentiment and liquidity—and crypto is no exception.”

Market Outlook: Caution Ahead

Despite the selloff, some analysts see this as a healthy reset for an overheated market. Derivatives funding rates have normalized, and spot buying has begun to stabilize at key support levels.

Still, volatility is expected to remain elevated heading into the weekend, with traders watching closely for further comments from Trump and reactions from global policymakers.

“Until the dust settles, it’s best to reduce leverage and keep powder dry,” Reinhardt advised. “There could be more downside if geopolitical rhetoric escalates.”