The cryptocurrency market experienced a significant drop on Friday, mirroring losses in major stock indexes, as tensions between China and the United States reignited. The overall market cap of cryptocurrencies fell by about 2% to approximately $4 trillion.
Bitcoin (BTC) saw a 3% decline, trading below $119k, while Ethereum (ETH) plummeted over 6% to around $4.1k at the time of writing. In the traditional markets, the Dow Jones Industrial Average dropped by around 500 points to trade at about 45,908, and the NASDAQ slipped by 2% to hover around 22,552.
Crypto Liquidations Almost Top $1B
Following the sharp market selloff on Friday, a total of 203,684 traders were liquidated, resulting in over $881 million in losses. According to data from CoinGlass, the largest single liquidation order occurred on Hyperliquid involving BTC-USDT and was valued at approximately $15.5 million.
Of note, more than $709 million of the losses were from long traders, leading to a bearish sentiment fueled by a long squeeze. Additionally, on-chain data analysis from Lookonchain revealed that a well-known Bitcoin OG, who made headlines last month for selling BTC for ETH, profited from the BTC short on Friday, with cumulative unrealized profits exceeding $35 million.
Why is the Crypto Market Down Today
Renewed Feud Between China and the U.S.
The primary reason for the sharp decline in the crypto market on Friday was the escalating trade tensions between China and the United States. President Trump’s threat to impose massive tariffs on China in response to China’s export controls on rare earths, including magnets, triggered a market sell-off. This situation is reminiscent of earlier this year when crypto assets faced volatility following Trump’s imposition of additional tariffs through executive orders.
Prolonged U.S. Government Shutdown Delays Crypto Legislation
Another factor contributing to the bearish sentiment in the crypto market on Friday was the ongoing gridlock between Democrats and Republicans in Congress. The U.S. Securities and Exchange Commission (SEC) missed its final deadline to decide on a spot crypto ETF due to the government shutdown. The delay in passing the CLARITY Act, coupled with reports of bipartisan hostility, is expected to further impact the crypto market.
In conclusion, the crypto market’s downturn on Friday can be attributed to a combination of renewed trade tensions between China and the U.S. and the prolonged government shutdown in the United States. These factors have contributed to market uncertainty and volatility, leading to significant liquidations and losses for traders.