CITIZENS NEWS

Cryptocurrency market PLUMMETS as trade war fears trigger $2.2B in liquidations

By ljdevon // 2025-02-04

This week, the cryptocurrency market experienced one of its steepest declines in years, with major tokens like XRP, Dogecoin (DOGE), and Cardano’s ADA plunging more than 25% in 24 hours. The sell-off, fueled by fears of a global trade war following new U.S. tariffs on Canada and Mexico, erased gains made since December and pushed prices back to pre-U.S. election levels. Total liquidations crossed $2.2 billion, marking one of the largest single-day liquidation events in crypto history. Key Takeaways: • XRP, Dogecoin (DOGE), and Cardano’s ADA fell over 25%, reversing gains since December. • Most major altcoins are down 40-50% in the past month, with Ethereum (ETH) dropping 20% in a single day. • Total liquidations exceeded $2.2 billion, the highest this year, as traders faced massive losses. • The sell-off was triggered by U.S. tariffs on Canada and Mexico, sparking fears of a global trade war.

A perfect storm: tariffs and market volatility

The cryptocurrency market’s sharp decline comes amid broader economic uncertainty. Over the weekend, the U.S. imposed 25% tariffs on Canada and Mexico, reigniting fears of a global trade war. The move has disrupted North American trade relations, with both countries threatening retaliatory measures. Financial markets, already on edge, reacted swiftly, with risk assets like cryptocurrencies bearing the brunt of the sell-off. “Massive long futures liquidation was observed over the weekend, with over $2 billion in futures stop-outs over the past 24 hours—the sharpest liquidation event in crypto history,” said Augustine Fan, head of insights at SignalPlus, in a Telegram message to CoinDesk. “Markets are likely to be in a full risk-off mode as we await the U.S. equity market open.” The interconnected nature of global economies means that tariffs could lead to higher costs for goods, impacting industries from automotive to agriculture. This, in turn, threatens jobs and raises costs for consumers, creating a ripple effect that could slow economic growth. For the cryptocurrency market, which thrives on risk appetite, the implications are dire.

Altcoins were hit the hardest

While Bitcoin (BTC) dropped 6%, altcoins like Ethereum, XRP, and Cardano’s ADA suffered far steeper declines. Ethereum, often seen as a bellwether for the altcoin market, fell 20% in a single day, with futures traders losing over 600 million. XRP and Dogecoin bets lost a cumulative150 million, while altcoin-tracked products shed $138 million. Ethereum’s price dropped below key support levels, raising concerns of a bearish trend. Analysts noted that resistance levels around 3,430 to 3,560 could limit any potential recovery. Similarly, Solana broke below critical support at 220, with the next support zone around 177–180. XRP and Cardano also showed bearish trends, with XRP potentially falling to 2.33–2.26 and ADA facing a 250.60 level. The cryptocurrency market is no stranger to volatility, but Monday’s sell-off stands out as one of the most severe in recent years. The last time the market saw such a steep decline was during the 2018 crypto winter, when prices plummeted after a speculative bubble burst. However, unlike 2018, the current downturn is driven by external economic factors rather than internal market dynamics. The high volatility of cryptocurrencies makes liquidations a common occurrence, but events like Monday’s provide actionable cues for market sentiment. As traders brace for further losses, the market’s direction will likely hinge on broader economic developments, including the outcome of trade negotiations and the Federal Reserve’s monetary policy decisions. The cryptocurrency market’s sharp decline underscores its vulnerability to external shocks. As fears of a global trade war loom, risk assets like cryptocurrencies are likely to remain under pressure. The $2.2 billion in liquidations serves as a stark reminder of the market’s fragility, with traders navigating a landscape fraught with uncertainty. Sources include: Coindesk.com Coinpedia.org NaturalNews.com

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