Bitcoin Plunges to $104,782 as Trump Escalates China Trade War
Key Takeaway: Bitcoin crashed 8.4% to $104,782 after Trump announced 100% China tariffs, triggering $7 billion in crypto liquidations.
Market Chaos Erupts After Tariff Announcement
The cryptocurrency market experienced its worst single-day decline in months on Friday as Bitcoin plummeted to $104,782 following President Donald Trump’s explosive announcement of unprecedented trade measures against China. The world’s largest cryptocurrency dropped 8.4% within hours, extending a broader market selloff that wiped $1.5 trillion from global equity markets.
Trump’s announcement on Truth Social platform sent shockwaves through financial systems worldwide. The president declared that the United States would impose a 100% tariff on all Chinese imports starting November 1, 2025, alongside comprehensive export controls on critical software technologies. This aggressive escalation came as direct retaliation against China’s newly announced restrictions on rare earth mineral exports.
Crypto Market Devastation
Massive Liquidation Wave
The crypto selloff triggered an unprecedented liquidation cascade across global exchanges. According to CoinGlass data, over $7 billion in leveraged positions were eliminated within a single hour, with Bitcoin accounting for $73 million and Ethereum suffering $175 million in liquidations. Long traders bore the heaviest losses, with more than $670 million in bullish positions wiped out during the crash.
Total cryptocurrency market capitalization plummeted from approximately $4.27 trillion to $4.10 trillion, representing one of the largest single-day value destructions in crypto history. Ethereum, the second-largest digital asset, declined 5.8% to $3,637, while altcoins experienced even more severe drops of 15-30%.
Risk Asset Correlation Strengthens
Bitcoin’s sharp decline reinforced its behavior as a risk asset rather than a safe haven during periods of acute stress. Unlike gold, which gained over 1% during Friday’s turmoil and maintained its traditional hedge characteristics, Bitcoin followed equity markets lower. This correlation pattern mirrors previous geopolitical crisis periods when crypto assets have tracked traditional risk indicators.
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Trade War Escalation Impact
Historical Context
The current market reaction echoes Bitcoin’s performance during the 2018-2019 U.S.-China trade war, when the cryptocurrency exhibited similar volatility patterns tied to diplomatic developments. Academic research from that period suggested Bitcoin’s safe-haven properties remained inconsistent during trade tensions, with price movements largely unpredictable based on trade war information alone.
Trump’s latest tariff threat represents the most severe escalation since taking office, with the president indicating he sees “no reason” to meet with Chinese President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation summit. This diplomatic breakdown suggests prolonged uncertainty ahead for global markets.
Supply Chain Implications
China’s rare earth export restrictions particularly concern technology and manufacturing sectors that drive modern economic growth. These materials are essential for electric vehicles, semiconductors, and advanced manufacturing—industries closely tied to cryptocurrency mining and blockchain infrastructure development.
Institutional Response and Recovery Prospects
ETF Inflows Continue
Despite retail panic selling, institutional Bitcoin ETF flows have remained remarkably robust throughout October. U.S. spot Bitcoin ETFs recorded over $5 billion in cumulative net inflows this month, with BlackRock’s IBIT leading institutional accumulation efforts. This professional buying during market weakness suggests sophisticated investors view tariff-driven declines as strategic entry opportunities.
Friday’s institutional trading activity showed continued support around the $116,000-$118,000 range, where large-scale buyers typically emerge during significant dips. This dynamic could provide price stability even amid continued short-term volatility.
Market Analysis
Technical analysts suggest Bitcoin remains within established long-term growth channels despite recent volatility. Some projections point toward potential recovery above $140,000 before month-end, contingent on trade tension developments. However, the sustainability of any rebound will largely depend on diplomatic progress between Washington and Beijing.
Crypto-related equities also suffered significant losses, with Circle declining over 6%, Robinhood falling 5%, and Coinbase shedding 5% of their value. MicroStrategy, the prominent corporate Bitcoin holder, dropped approximately 3% as markets reassessed crypto exposure risks.
Federal Reserve Implications
The tariff escalation complicates Federal Reserve monetary policy considerations, with inflation concerns potentially rising due to import cost increases. Traders are reassessing expectations for future rate cuts that had previously supported risk asset valuations throughout 2025.
Higher tariff costs could pressure consumer prices and complicate the Fed’s inflation management strategy, potentially leading to extended higher interest rate periods that typically pressure cryptocurrency valuations.
Outlook and Conclusion
Market participants are closely monitoring diplomatic developments for signs of negotiation resumption. Trump’s historical pattern of using tariff threats as negotiating tactics—termed “TACO trades” by some analysts—suggests potential for rapid sentiment shifts if diplomatic progress emerges.
The current crisis underscores Bitcoin’s continued evolution as a mainstream financial asset, with institutional adoption providing downside support while retail sentiment drives short-term volatility. As global trade tensions escalate, cryptocurrency markets face an uncertain path forward, dependent heavily on geopolitical developments beyond traditional market fundamentals.
Sources: Reuters, Yahoo Finance, CoinDesk, Business Times Singapore
