U.S.-China trade tensions triggered a sell-off in bitcoin and altcoins on Friday. Now the industry is calling it the largest single-day purge in crypto history.
More than $19 billion in leveraged crypto bets were liquidated over a 24-hour period that ended Saturday evening, affecting some 1.6 million traders, according to research platform Coinglass, which called its estimate conservative and the real total "likely much higher."1
Bitcoin, which had been grinding higher on the so-called debasement trade, diverged from gold as Beijing placed new restrictions on rare-earth minerals exports and subsequently pushed President Donald Trump to threaten a 100% tariff on China.2 As the market digested the renewed trade spat, bitcoin stopped holding hands with gold and followed risk assets, like stocks, lower, pulling back from a recent record.
"The concerns over an increase in tariffs were undeniably the catalyst," Sean Farrell, Fundstrat's head of digital assets, said of the sell-off in a Monday report.
Why This Matters To You
Investors seeking shelter from geopolitical tension and waning dominance of the U.S. dollar have been bidding up gold and bitcoin prices. The latest phase of the U.S.-China trade war appears to have momentarily severed the link between the two assets, making the world's largest cryptocurrency behave more like other risk assets, such as stocks.
The crypto market's operational quirks fanned the flames. When traders rushed the exits at a time when there was less liquidity, the added selling pressure ripped through coin prices.
(Though crypto markets do not close, trading volumes tend to wax and wane alongside U.S. stock market hours.).4 Bitcoin (BTCUSD) fell below $110,000, while altcoins including ethereum (ETHUSD) and solana (SOLUSD) notched double-digit declines. Some lesser-known coins lost four-fifths of their value.
The chaos led to price dislocation in some coins across trading venues. For example, the price of solana was at one time roughly $20 lower on international exchange Binance than on Coinbase, according to Farrell.3 Coinglass data show that liquidations on Hyperliquid, Bybit, and Binance accounted for most of the $19 billion purge that transpired between Oct. 10 and Oct. 11.5
Some prices are starting to creep back up. Bitcoin was recently back above $112,000, for example. But crypto-linked stocks including Strategy (MSTR), Coinbase (COIN), Circle (CRCL), and Robinhood (HOOD) were all lower in recent trading.
BlackRock (BLK) chief Larry Fink defended bitcoin's role in investor portfolios in an interview with CBS on Sunday.6
60 Minutes. "More risk in your 401(k)?"
"There is a role for crypto in the same way there is a role for gold," he said.