Trade War Developments Lead to $800M in Liquidations: Crypto Market Hit Hard

The cryptocurrency market experienced a significant selloff overnight as fears of renewed trade conflicts between the United States and the European Union impacted global investor sentiment. Bitcoin and key altcoins quickly reversed their recent gains, with traders responding to new tariff announcements and concerns over possible economic retaliation on both sides of the Atlantic. Despite crypto being perceived as a distinct market, this situation illustrated how rapidly digital assets can mimic high-risk trades during periods of macroeconomic uncertainty.

Key Takeaways

A sharp selloff caused over $800 million in liquidations overnight, primarily impacting long positions.
Major platforms affected included Hyperliquid and Bybit, leading to significant losses in leveraged trading.
The timing of the selloff coincided with the opening of CME trading, suggesting broader institutional influences.
Bitcoin struggles below key resistance levels, indicating a fragile market recovery.

According to analyst Darkfost, the impact of these liquidations was swift and intense. In just a few hours, over $800 million worth of leveraged positions were eliminated, with approximately $768 million comprising long liquidations. This intensity of long position closures suggested that many traders were betting on further price increases but were unexpectedly caught off guard as prices quickly dropped.

Crypto Market Liquidations by Exchange | Source: Coinglass

The data reveals where the most significant damage occurred. Hyperliquid experienced the highest volume of forced liquidations, around $241 million, followed closely by Bybit at $220 million. This wave of liquidations seems to be partly linked to the announcement of new tariffs targeting European imports, which prompted a rapid response from EU policymakers, thus reigniting the overarching "trade war" narrative across financial markets.

Trade War Developments Lead to $800M in Liquidations: Crypto Market Hit Hard

Potential for Increased Volatility Ahead

Darkfost warns that the timing of this market decline is as crucial as the scale of liquidations. The moment CME trading commenced, Bitcoin experienced a sharp downturn, indicating that institutional trades and macroeconomic positioning played a direct role in the market decline. Historically, during times of increased risk, the CME opening has functioned as a volatility trigger, especially when markets are already unstable and leverage remains high across major exchanges.

As a result, the next few hours are critical. Similar price movements could occur when US markets open, where liquidity conditions and sensitivity to headlines often heighten market reactions. If selling pressure resumes, the cryptocurrency market may face another wave of forced liquidations, particularly impacting high-beta altcoins susceptible after the overnight decline.

The message is clear: traders should remain cautious and avoid excessive reliance on leverage while the macroeconomic landscape is unstable. Liquidations may cause sharp price rebounds, but they can also quickly reset momentum if investor fear spreads across high-risk assets. Darkfost emphasizes the importance of monitoring political developments, as the market is now responding more to narratives than technical charts. The potential for further market-shaping statements exists, especially given that past experience shows notable headlines often emerge during weekends.

Bitcoin Faces Market Challenges Amid Volatile Conditions

Bitcoin is currently trading around $93,100 after facing substantial resistance at the $96,000-$97,000 zone. The current chart indicates that BTC has yet to break through essential moving averages, limiting upward momentum due to a declining overhead trendline. This suggests that the latest upward movement may have been a temporary rebound rather than a true trend reversal.

BTC consolidates in a long range | Source: BTCUSDT chart on TradingView

Structurally, the price is currently forming higher lows following a sharp decline from the $110,000 level. However, this rebound remains at risk as long as BTC remains below resistance levels and is unable to convincingly reclaim the mid-$90,000 range. Recent candlesticks demonstrate market hesitation, with wicks indicating aggressive selling during price increases.

The red long-term moving average is rising near the low-$90,000 range, potentially serving as a dynamic support area. If Bitcoin manages to stay above this level, it retains the recovery structure and prevents a deeper decline towards earlier liquidity areas.

This situation is essential for the broader cryptocurrency market. When Bitcoin remains confined under resistance, altcoins typically struggle to maintain upward momentum and become increasingly sensitive to liquidation-induced volatility. While risk appetite can swiftly return, it hinges on Bitcoin surpassing resistance and establishing a solid foothold above it. Until then, the crypto market remains in a precarious stabilization phase rather than confirming a bullish trend.

Featured image from ChatGPT, chart from TradingView.com