Trump’s China Tariff Sparks Record $19 Billion Crypto Crash and Swift Recovery

Bitcoin, which had reached a record high above $126,000 just days earlier, crashed below $102,000 before recovering. The selling happened so fast that experts compared it to the March 2020 pandemic crash. But this time, the damage was much worse—nearly 20 times larger than previous historic crashes.

What Caused the Crash

On Thursday, October 9, China announced new rules requiring licenses to export products containing rare earth minerals. These materials are essential for making smartphones, electric vehicle batteries, and military equipment.

Trump responded the next day by threatening a 100% tariff on all Chinese imports starting November 1. He also said the U.S. would control exports of critical software. The announcement came after traditional stock markets closed on Friday afternoon, catching crypto traders off guard.

Bitcoin dropped $3,000 immediately when Trump’s Truth Social post went live. Within hours, the selling pressure spread across all cryptocurrencies. Ethereum fell 12%, Solana dropped nearly 20%, and smaller coins lost even more value.

Record-Breaking Liquidations

The term “liquidation” means traders lost their borrowed money when prices moved against them. When you trade with borrowed funds, exchanges automatically close your position if losses get too big. Friday’s crash triggered this process for millions of traders at once.

Bitcoin and Ethereum saw $1.37 billion and $1.26 billion in liquidations respectively. The largest single loss was $87.53 million on one Bitcoin trade. Long positions—bets that prices would rise—made up $16.83 billion of the total damage. Only $2.49 billion came from short positions betting on falling prices.

CoinGlass, which tracks crypto data, confirmed this was the largest liquidation event in history. The March 2020 COVID crash saw $1.2 billion in liquidations. The November 2022 FTX exchange collapse hit $1.6 billion. Friday’s event was 12 to 15 times bigger than those previous records.

Some analysts believe the actual damage could be even higher. One estimate suggested between $300 billion and $400 billion in unreported losses across the entire market.

Bitcoin ETFs Show Strength

Despite the chaos, Bitcoin ETFs (exchange-traded funds) showed institutional investors remain committed. These funds allow people to invest in Bitcoin through traditional stock market accounts without owning the cryptocurrency directly.

Daily trading volumes for Bitcoin ETFs regularly hit between $5 billion and $10 billion. On the day of the crash, the Blockworks tracker showed Bitcoin ETF volume reached $10.21 billion—evidence that major investors were actively trading through the turmoil.

BlackRock’s iShares Bitcoin Trust (IBIT) leads the pack. The fund now holds over 800,000 Bitcoin worth approximately $97 billion, representing nearly 4% of Bitcoin’s entire supply. It generates an estimated $244.5 million in annual revenue for BlackRock, making it the company’s most profitable ETF.

Just before the crash, Bitcoin ETFs had recorded their largest daily inflow since July—$1.21 billion on October 7. Throughout 2025, institutional purchases through ETFs have outpaced new Bitcoin production by miners by a factor of 7.4.

The Recovery Begins

Markets started stabilizing over the weekend. On Saturday, Trump posted on Truth Social that “The U.S.A wants to help China, not hurt it,” suggesting he might reverse course. China’s Ministry of Commerce also clarified that its export controls would have “minimal impact” on global supply chains.

Source: @realDonaldTrump

By Sunday, Bitcoin had climbed back above $114,000, recovering about 12% from Friday’s low. Ethereum rose 6%, and Solana gained 8%. On Monday, the broader crypto market reclaimed the $4 trillion mark in total value.

However, the recovery doesn’t erase the damage. Bitcoin remains down about 7% for the week, Ethereum is down 8%, and smaller coins like Solana and Dogecoin lost 15% to 19%. Traders who were liquidated cannot get that money back, even if prices recover.

One crypto whale—a trader with massive positions—reportedly made $192 million by betting against Bitcoin just 30 minutes before Trump’s announcement. This has raised questions about whether some traders had advance knowledge of the tariff news.

What It Means Going Forward

The crash revealed how sensitive crypto markets have become to political and economic news. What started as a technology experiment now moves in lockstep with stocks, bonds, and traditional markets.

Analysts remain split on what comes next. Some view Friday’s crash as a temporary setback in an ongoing bull market. They point to strong institutional buying through ETFs and Bitcoin’s quick recovery as positive signs. Tom Lee, a prominent analyst, called the dip a buying opportunity and emphasized that blockchain fundamentals remain strong.

Others worry that excessive leverage—trading with borrowed money—makes crypto vulnerable to more violent swings. The fact that one announcement could wipe out $19 billion in hours shows the risks haven’t disappeared, even as the market has matured.

Bitcoin’s all-time high of $126,210 was reached on October 6, just four days before the crash. Some sources also report the ATH as high as $126,279. Whether it can return to those levels depends partly on whether Trump follows through with the tariffs or negotiates with China instead.

The Bottom Line

Trump’s 100% tariff threat created the largest crypto crash ever recorded, but markets bounced back faster than many expected. Bitcoin ETF volumes hitting $10 billion daily shows institutional money isn’t backing away. Yet the violence of the selloff proves crypto remains a high-risk market where political decisions can instantly destroy billions in value. The next few weeks will reveal whether this was just a temporary shock or the beginning of a longer downturn.