Chaos Ensues: Traders Lose $8 Billion as Bitcoin Plummets to $112,000 After Trump’s 100% Tariffs on China

The crypto market was thrown into turmoil after U.S. President Donald Trump announced 100% tariffs on all Chinese imports, triggering a global sell-off that wiped out more than $8 billion in trader positions within hours. Bitcoin (BTC), which had been trading above $125,000 earlier this week, collapsed to $112,000, its sharpest intraday drop since mid-2024.

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A Perfect Storm of Panic

The aggressive tariff move reignited fears of a new trade war between the world’s two largest economies, sending shockwaves through both traditional and digital markets. U.S. futures dipped sharply, while Asian equities plunged in early trading. But the biggest pain was felt in the crypto derivatives sector, where excessive leverage once again amplified losses.

According to data from Coinglass, over $8 billion in long positions were liquidated in less than 24 hours, marking one of the largest liquidation events of 2025. Bitcoin and Ethereum led the wipeout, but altcoins like Solana, Avalanche, and XRP also suffered double-digit losses.

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Bitcoin’s Role as a Macro Barometer

Ironically, many analysts had expected Bitcoin to act as a “safe haven” amid geopolitical tensions. However, as seen before, when liquidity dries up and markets enter panic mode, even Bitcoin isn’t immune.

“Bitcoin may be a hedge against inflation, but not against deflationary fear,”
said Marcus Lin, senior analyst at BlockRoots Research.
“When traders rush to cash, everything gets sold — even BTC.”

The plunge highlights the market’s fragile balance between optimism over ETF inflows and sensitivity to macro shocks. Despite billions pouring into Bitcoin ETFs over the past months, leveraged trading has inflated volatility to dangerous levels.

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Tariffs, Politics, and Market Fear

Trump’s 100% tariff declaration was part of his campaign promise to “rebalance trade and protect American jobs.” But the immediate economic impact has been severe — especially in global tech supply chains dependent on Chinese manufacturing.

Economists warn that such aggressive protectionism could stifle global growth and lead to a wave of capital flight from emerging markets. The crypto market, deeply tied to risk sentiment, has become one of the first casualties.

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What’s Next for Bitcoin?

Market analysts are divided. Some believe the correction is temporary and could present a buying opportunity before stabilization above $110,000. Others caution that Bitcoin could retest the psychological $100,000 level if global uncertainty persists.

Still, many long-term holders remain unfazed. On-chain data shows a record number of wallets holding BTC for over 12 months, suggesting that conviction among “diamond hands” remains strong.

“This is not 2018. Institutional demand is real, and ETFs continue to accumulate,”
noted crypto economist Sarah Cho.
“But macro shocks like this remind us that Bitcoin isn’t isolated from global politics.”

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Conclusion: A Reality Check for Crypto Bulls

The crash following Trump’s tariff escalation serves as a harsh reminder of Bitcoin’s dual nature — both a revolutionary asset and a highly speculative one. While the long-term narrative of digital sound money remains intact, traders are once again learning that leverage and politics can be a brutal mix.

As the dust settles, all eyes will be on how global markets — and especially Bitcoin — respond to the evolving trade tensions between the U.S. and China.