Crypto Market Suffers $8-10B Liquidation Event as President Trump Officially Signs Tariffs on Mexico & Canada, 10% Tariffs on China

Over the weekend, Trump fired a salvo into the very heart of some of the biggest trading partners of the US by levying across-the-board import tariffs

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Over the weekend, Trump fired a salvo into the very heart of some of the biggest trading partners of the US by levying tariffs, roiling the only liquid market that was fully open over the weekend - the crypto sphere. Now, as other risk assets continue to catch up with the legendary volatility-induced swoon in the altcoin space, best characterized by the $TRUMP meme coin plunging ~20 percent over the past 24 hours, one analyst contends that something has fundamentally changed for altcoins.

PRESIDENT TRUMP OFFICIALLY SIGNS 25% TARIFFS ON MEXICO & CANADA, 10% TARIFFS ON CHINA FOLLOWING WEEKS OF DISCUSSION

The White House has released a detailed statement explaining the rationale & goals of the tariffs. Below is the full text of President Trump's statement to the…

— Stock Talk (@stocktalkweekly) February 1, 2025

In keeping with his earlier promise, President Trump imposed a 25 percent tariff on all ex-energy imports from Canada and Mexico on the 01st of February, while applying a 10 percent levy on all energy-related imports from these countries. He also imposed an additional 10 percent tariff on all imports from China, while eliminating the de-minimis rule that had exempted imports valued at under $800, thereby allowing the likes of Temu and Shein to flood the US market. Interestingly, Trump's latest tariffs have a hard-coded escalation bias as the tariffs automatically increase in case of retaliation. What's more, the President has clearly hinted that EU tariffs are also in the pipeline.

UPDATE: Total liquidations today may be $8-10B, not $2B, per @benbybit. https://t.co/f7lhm18hXV

— Cointelegraph (@Cointelegraph) February 3, 2025

The crypto markets felt the full brunt of the impact from Trump's weekend actions, experiencing some of the highest liquidations ever recorded, to the tune of between $8 and $10 billion, easily eclipsing the capitulation seen in the aftermath of FTX's collapse.

Ironically, the $TRUMP meme coin was also battered in this melee, having sustained losses of around 20 percent over the past 24 hours alone.

As a refresher, the $TRUMP meme coin's only claim to utility lies in bringing together like-minded traders and investors to foster a community premised on the incoming US president's star power.

Of course, much of the recent weakness in the crypto sphere is simply a function of the strength of the US dollar. As tariffs rise, importers have to buy up more dollars to pay for the more expensive imports, leading to a tangible increase in the demand for USD.

Crypto’s Reckoning: Institutional Stability vs. Retail Panic

Over $2 billion in liquidations in 24 hours—the largest in history—has sent shockwaves through the crypto ecosystem. Bitcoin tumbled 14% from its recent peak,… pic.twitter.com/6aqwfGBqkK

— Martin Leinweber (@mleinweber2) February 3, 2025

Martin Leinweber, a digital asset strategist at MarketVector, has now penned an exhaustive note on this weekend's crypto swoon. Specifically, in relation to altcoins such as the $TRUMP meme coin, Leinweber notes:

"Post-election, altcoins (light blue line in the graph below) saw huge outperformance after Trump’s victory, unlike previous cycles. But now? A massive, abnormal drawdown in recent weeks—far beyond what we’ve seen historically."

He then points out:

"Altcoins surged early, fueled by speculative frenzy, but without deep institutional backing, the correction is hitting harder and faster than ever before. This is not like the last cycle—something has changed."

This lack of institutional interest does not bode well for the prospects of the $TRUMP coin and its other peers in the altcoin universe.

The yields on the US Treasuries are rising today on increasing inflation fears. This is a net-negative for risk assets, including Bitcoin. As per a new study, Bitcoin typically moves in the direction of the global M2 supply a whopping 83 percent of the time! And as goes Bitcoin, so do altcoins, including $TRUMP and $MELANIA. Here, though, there is a problem: the global liquidity proxy is currently at the precipice of turning negative (check out this chart).