Bitcoin Plunges 6% as Trump’s Tariffs Spark $500 Million of Liquidations

The cryptocurrency market plummeted on Thursday, with over half a billion dollars in liquidations, following the announcement of broad ‘reciprocal’ trade tariffs by President Donald Trump on April 2.

Bitcoin (BTC) has dropped 5.6% in the past 24 hours, trading around $81,600—approximately 25% below its all-time high of $108,000, which was recorded earlier this year. Ethereum (ETH) fell 6.3% to $1,767, while XRP declined 7.3% to $1.99. Solana (SOL) cratered 12% to $113.

Meanwhile, the total cryptocurrency market capitalization plunged by nearly 7% over the past day, reaching $2.7 trillion, according to CoinGecko. Leveraged liquidations in the same period totaled around $566 million. BTC accounted for nearly $183 million of this figure, while ETH followed with $108 million, Coinglass data shows.

“Serious Risks”

view, Trump’s Liberation Day tariffs— unclear in size and calculation and reciprocal in nature on nearly all US imports and targeted sector levies like a 25% auto tariff—present serious economic risks,” said Mike Marshall, Head of Research at Amberdata. He pointed out that Chinese tariffs at 34% and European Union (EU) tariffs at 20% alone signal significant cost increases, with exemptions looking unlikely.

“This sets the stage for a broader trade war and potential stagflation,” Marshall said. “Supply chains cannot be built overnight and costs will be passed onto consumers, decreasing the likelihood of rate cuts.” Marshall further highlighted that March’s PMI drop to 49.0 reflects weakening economic activity, stoking fears of rising inflation and slowing growth.

Historically, similar tariff announcements have triggered immediate market volatility. He cited the 2019 U.S.-China trade war, when the S&P 500 dropped 6% in May of that year, and noted that Bitcoin often mirrors traditional risk assets in such scenarios.

“For instance, BTC dropped nearly 8% during Russia’s invasion of Ukraine in 2022, contradicting its ‘safe-haven’ narrative,” he said. “Despite recent whale accumulation and April’s typical +25% seasonal gain for BTC, I’m cautious—tariffs create macro headwinds that could pressure Bitcoin lower in the short-medium term. All eyes will be on the April 10 CPI release.”

Some Experts Remain Optimistic

Meanwhile, Dr. Youwei Yang, Chief Economist at BIT Mining, acknowledged the market’s fear but argued that the reaction might be overblown.

“The [Federal Reserve’s] rate cuts will likely be more aggressive if a recession comes, so we will likely continue to see some market turbulence before the Fed steps in and helps,” Dr. Yang said. “Also, Trump’s tariff decision is not only a tariff but also a way to test the waters of other countries' psychological conditions of how much room they will have to negotiate further down the road.”

While not outright bullish, Yang remains cautiously optimistic. “It’s not time to be too pessimistic,” he concluded.

Trump’s Sweeping Tariffs

On Apr. 2, President Donald Trump signed a sweeping “reciprocal tariff” policy at the White House, enacting a 10% baseline tariff on all imports.

The plan includes steep tariffs on several countries, including 34% on China, 20% on the EU, 46% on Vietnam, and 32% on Taiwan.

Trump stated that the policy aims to level the playing field for American industries. However, global trade tensions have since heightened, and many nations vowed to take retaliatory measures.