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Highlights
- $2.25 billion in liquidations wiped out 736,000 traders as market crashes.
- Ethereum sees its worst single-day drop since 2021, alongside severe altcoin losses.
- Trump’s tariff announcement triggers widespread panic and risk asset selloffs.
On February 3rd, the global cryptocurrency market was hit with one of its largest crashes, marked by a significant 7% dip in total market capitalization, falling to $3.12 trillion. This sudden drop resulted in over $2.25 billion in liquidations, severely impacting traders and creating a wave of forced selling. According to market analyst Michael Van de Poppe, this event surpassed even the crashes triggered by the collapse of FTX and Terra LUNA in terms of liquidation scale. More than 736,000 traders were affected, with $1.87 billion in long positions being liquidated, which intensified the market downturn.
Ethereum (ETH), the largest altcoin by market capitalization, was hit especially hard, falling from above $3,000 to as low as $2,150. This marked the biggest single-day loss for Ethereum since 2021. Although ETH later recovered to trade at $2,584, it still reflected the intense volatility within the broader crypto market. Other top ten altcoins followed suit, with Ripple’s XRP dropping by 17%, trading at $2.27, and Solana (SOL) falling below $200 after a 7% loss. BNB Coin (BNB) and Cardano (ADA) also posted significant declines, with losses of 12% and 20%, respectively.
Bitcoin (BTC), while also experiencing a decline, saw comparatively milder losses, registering a 4% drop to trade around $95,000. This performance allowed Bitcoin’s market dominance to increase to 64%, its highest level since February 2021. However, despite this relative strength, the Bitcoin Fear and Greed Index shifted from "greed" to "neutral," signaling a cooling of bullish sentiment among traders.
The major trigger for the crypto market’s sudden crash is attributed to the announcement of tariffs by U.S. President Donald Trump. These tariffs, which could impact billions of dollars in imports from Canada and Mexico, have contributed to heightened uncertainty surrounding global trade relations. The possibility of an escalated trade war, along with concerns over stagflation and recession, has forced traders to offload riskier assets. This panic spread beyond the crypto markets, with traditional financial markets also taking a hit. At the time of reporting, Nasdaq futures were down by 390 points, and the S&P 500 futures had fallen by 1.46%.
The ongoing tariff dispute has created turbulence in global markets, with far-reaching implications for both crypto and traditional assets. As the situation evolves, the market will likely continue to react to any updates regarding tariff policies and their potential impact on global trade and economic stability.
