The Crypto World Shaken: What Secret Forces Are Behind This Massive Market Meltdown?

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The cryptocurrency market has suffered a substantial downturn, with a 9.7% decrease in total market capitalization over the last 24 hours, dropping to $3.07 trillion as of February 3rd. This marks the lowest level since November 2024. Several factors underlie this decline, most notably U.S. President Donald Trump’s recent tariffs on imports from Canada, Mexico, and China, which have unsettled global markets, including cryptocurrencies.

On February 1st, Trump signed an executive order imposing 25% tariffs on imports from Canada and Mexico and a 10% tariff on Canadian energy and oil as well as goods from China. These tariffs are slated to take effect on February 4th. In response, Mexico’s President Claudia Sheinbaum announced retaliatory measures, and Canadian Prime Minister Justin Trudeau committed to imposing 25% tariffs on certain American goods.


The likelihood of a trade war has notably led to a sell-off in cryptocurrencies, which are often considered high-risk investments and sensitive to policy shifts. Over $2.25 billion in crypto positions have been liquidated in the last 24 hours, with nearly $1.87 billion of these being long positions. This event is one of the largest liquidation occurrences in the history of the crypto industry, exceeding the impacts of the COVID-19 market crash and the FTX debacle. More than 738,000 traders saw liquidations, with the largest single occurrence on Binance involving ETH/BTC valued at $25.6 million.

The market also witnessed over $700 billion wiped off in the past four days, with the total market capitalization of all cryptocurrencies falling more than 21% from $3.57 trillion on January 31st to an intra-day low of $2.81 trillion. This represents a 17% decline from the all-time high of $3.73 trillion recorded on December 17th, 2024. The market crash saw cryptocurrencies such as Ethereum (ETH) falling 16% to $2,589, and XRP declining 16.4% to $2.40. Other major cryptocurrencies, including Binance’s BNB, Dogecoin (DOGE), Cardano (ADA), and Tron (TRX) have also plummeted over 10%.

This market environment, characterized by high leverage, suggests that even minor market movements could trigger a cascade of sell-offs, further impacting prices significantly. Despite the extensive liquidations, the event is not the most impactful compared to the $2.9 billion liquidated during the COVID-19 market crash or the $1.6 billion each during the Terra-Luna crash and the FTX collapse.

Analysts indicate that the market could see further bearish movements, with the total market cap retreating to the $2.81 trillion level or the $3.18 trillion demand zone. Meanwhile, there’s potential bullish activity for those hoping to see the crypto market cap returning above the 100-day and 50-day moving averages of $3.18 trillion and $3.36 trillion, respectively.