XRP, Dogecoin (DOGE), and Cardano’s ADA dropped more than 25%, reaching pre-U.S. early November election levels.
It’s one of the steepest drops in recent years, with most major cryptocurrencies down 40–50% in the last month.
The market capitalization dropped 12%, the largest decline in over a year.
Solana’s SOL, Ethereum (ETH), Bitcoin (BTC), and XRP were among the major digital assets that posted heavy losses during the London trading session. Bitcoin was down 8% by mid-morning, trading above $93,100, according to data from Binance.
Liquidations totaled over $2.23 billion, the highest amount ever recorded on Coinglass data.
Traders’ woes
729,728 traders were liquidated on the day, and the total liquidations came in at $2.23 billion. This marked the worst day ever recorded in the crypto market. The largest single liquidation order occurred on Binance, with an ETH/BTC value of $25.64 million.
Liquidation occurs when a trader does not have enough funds to maintain an open leveraged trade.
Impact of Donald Trump’s tariffs
The trade war that the U.S. is engaged in is cited as a cause of the market crash. The 25% tariffs imposed on Canada and Mexico by President Donald Trump appear to have sparked the downturn. Both nations have threatened retaliatory tariffs in response, which have disrupted trade relations in North America.
- Financial markets are concerned about higher prices for goods, which could affect everything from the automotive sector to the agricultural industry. Due to these countries’ interconnected economies, the imposition of these tariffs may cause a wider economic slowdown, endangering jobs and driving up consumer prices.
- Ethereum’s 20% decline startled the crypto market, behaving like an altcoin in decline, without the support of long-term institutional inflows or any short-term catalysts.
- President Donald Trump’s recent tariffs on imports from China, Mexico, and Canada are expected to impact the nation’s cryptocurrency mining industries.
The U.S. declared that starting in February, a 10% tariff on Chinese goods and a 25% tariff on imports from Canada and Mexico will be implemented, as reported by the Associated Press on January 1, 2025.
Although the tariffs are mainly directed at traditional industries, the crypto industry is still affected.
- Miners are particularly vulnerable to changes in trade regulations or tariffs because of their dependence on the importation of mining equipment.
- Rising import prices for mining equipment could affect operating costs for U.S. miners, who primarily purchase their equipment from foreign vendors.
Beijing, China is home to Bitmain, while Hangzhou is home to Canaan. These companies produce the greatest quantities of GPUs (Graphics Processing Units) and ASIC (Application-Specific Integrated Circuit) miners.
Canada’s share of the global hash rate has fluctuated over time, but it remains a major participant in Bitcoin mining worldwide. As of September 2023, Canada is responsible for roughly 7% of the global Bitcoin mining hash rate.
“Prime Minister Justin Trudeau imposed a 25% tariff on American goods following his declaration that he would ‘not back down in standing up for Canada,” reports indicate.
Additionally, Mexican President Claudia Sheinbaum declared retaliatory tariffs in response to Trump’s decision to impose a 25% tariff on all Mexican goods. Sheinbaum stated that although negotiations over the conflict were ongoing, tensions between the two nations escalated into a trade war, and Mexico was forced to respond in kind.
Sheinbaum wrote, “I’ve directed my economy minister to carry out the Plan B we’ve been working on, which includes tariff and non-tariff measures in defense of Mexico’s interests.”
