What might have caused the biggest liquidation in crypto history🤯🫨.
The biggest liquidation event just hit the market on 3rd of feb 2025.2Billions wiped out 🤒. Alts was down 40%. Panic everywhere. IWas this the real crash, or just another shake out before the next move?
But obvious just buy and Hodl its our altseason time.
what might have caused these.
In the last 30+ hours, crypto just saw one of its worst crashes. ETH was $3,500 3 days ago. Yesterday? $2.1K—a brutal 40% drop. Alts got hit even harder, with many dumping 30-35% in a single day.
Trump officially signed new tariffs on imports from Canada, Mexico, and China.
The move is meant to hold these countries accountable for failing to stop illegal immigration and fentanyl trafficking into the U.S.
Markets reacted instantly—stocks dropped, and crypto wasn’t spared.
On January 31st, the White House announced new tariffs—25% on Canada and Mexico, and 10% on China.
However, the situation intensified.
Canada retaliated with a 25% tariff on U.S. imports, while Mexico and China vowed to implement strong countermeasures.
Global markets reacted with panic, and the cryptocurrency market also experienced the ripple effects.
extended its trade pressures beyond China, Canada, and Mexico by also warning BRICS nations of imposing a 100% tariff should they attempt to introduce a BRICS currency. But why is this development causing market turmoil? To grasp the situation, it's essential to understand the mechanics of tariffs and their broader economic implications.
Tariffs are fees imposed as a percentage on the price of goods purchased from foreign sellers.
A common misconception is that tariffs do not contribute to inflation. However, this is a myth.
In practice, importers (such as U.S. companies) bear the cost of tariffs, which increases their expenses. These higher costs are then passed on to consumers in the form of elevated prices.
When companies face higher costs, they often pass these expenses on to consumers through increased prices.
This rise in prices fuels inflation, which can strengthen the U.S. Dollar (DXY).
A stronger dollar pressures the FED to tighten monetary policy—raising interest rates and reducing liquidity in the financial system.
When this occurs, risk assets, such as cryptocurrencies, tend to experience significant declines.
Tariffs have the potential to stimulate domestic production, but this process often takes years to materialize.
In the short term, tariffs tend to strengthen the U.S. Dollar (as measured by the DXY index) and can provide financial benefits to the government through increased revenue.
However, during this period, businesses and consumers bear the brunt of the impact, facing higher costs and reduced profit margins.
7.How Severe Could the Consequences Be?
The extent of the impact hinges on the volume of trade—and it’s enormous.
Canada stands as the United States' biggest trading partner, with close to $1 trillion worth of goods and services exchanged across the border annually.
Disrupting this flow could trigger significant economic repercussions.
🔹 Mexico: $800 billion in trade volume
🔹 China: Over $600 billion in trade volume
The U.S. depends on Canada for critical resources like oil, lumber, and cement, while 20% of its food supply is sourced from Mexico.
The imposition of tariffs drives up the cost of these essential goods, placing a significant burden on consumers
9.More Pain Incoming
We’ve witnessed the recent turmoil, but the storm may not be over yet.
The U.S. is now threatening the EU with tariffs, further escalating tensions and adding fuel to the fire. This development has been a key trigger behind the recent market wipeout.
So, what’s next for crypto? Is the bull market truly dead, or is this just another shakeout? Let’s break it down.
10 The Bigger Picture
Amid the turmoil, BTC and the majority of cryptocurrencies (excluding ETH) remain in a bull market.
This recent downturn resembles past market crashes—such as those triggered by COVID, the FTX collapse, and the Yen carry trade collapse—all of which signaled cycle bottoms.
With $2 billion in long liquidations, this event appears to be more about forced selling to eliminate the last remaining bulls, rather than signaling the end of the cycle.
Surviving these market drops isn’t easy, but those who hold through the volatility often come out stronger in the end.
If this is your first experience with a 30-40% daily crash, remember that such swings are not uncommon in the crypto world.
When the next upward trend begins, it has the potential to surpass anything we’ve witnessed before.
Don’t let panic dictate your decisions—step away from the charts, maintain your focus, and stay committed to your long-term strategy.
