The crypto market just went through the worst liquidation day in history. An incredible $2.15 billion got liquidated from the market in the past 24 hours, surpassing even the dramatic crashes of FTX and LUNA. This liquidation event also exceeded the January 2022 crash that marked the beginning of the bear market.
Let’s try to understand why exactly the crypto prices are plunging today.
Global Economic Tensions Fuel Market Uncertainty
The market turmoil coincides with significant geopolitical developments, particularly in North America. Donald Trump’s implementation of a 25% tariff tax on imports from Mexico and Canada has sent shockwaves through the global markets. The Canadian Dollar has plummeted to a 22-year low against the USD, prompting Canada’s Prime Minister to retaliate with 25% tariffs on over $155 billion worth of American goods.
The impact has been immediate and severe, with U.S. futures indices showing significant decline at the weekly open – Nasdaq futures ($NQ) dropped 2.5%, while S&P 500 futures ($ES) fell 1.8%. Trump’s new tariffs are estimated to affect $1.3 trillion in U.S. trade, equivalent to 5% of the country’s entire GDP, with Trump stating, “It will be worth the price” and claiming “They cause success.”
This is one of the bloodiest days in crypto history.
— Miles Deutscher (@milesdeutscher) February 3, 2025
If you're wondering what the f*ck is happening, here’s your full recap – no fluff, just facts.
🚨—- Major Headlines —-🚨
→ $2.15b liquidated from the crypto market, making it the worst liquidation event in history… pic.twitter.com/KfzGooDzIQ
In the midst of this turmoil, Bitcoin’s dominance has climbed back above 62% as altcoins experience significant bleeding. Bitcoin transaction fees have hit their lowest level since the 2015 bear market, while price action saw ETH wicking to $2,100 and BTC touching $91,000. The DeFAI sector has shown remarkable resilience, posting a 5% gain while other narratives struggle. Among the top 50 cryptocurrencies, DEXE stands as the lone gainer with a modest 1.5% increase. The broader altcoin market (excluding the top 10 cryptocurrencies) has taken a severe hit, dropping 11% with a dramatic wick down to -20%.
Looking ahead, this market correction could signal a period of sustained volatility and uncertainty. The combination of macroeconomic tensions and crypto market dynamics suggests we might see a period of consolidation, with Bitcoin potentially maintaining its dominance while altcoins continue to face pressure. However, the DeFAI sector’s resilience might indicate emerging opportunities in specific market segments, even during broader market downturns.
Read also: Time To Sell DOGE? Trader Sends a Huge Warning to Dogecoin Holders
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