Trump causes cryptos to fall

Crypto News – major correction in cryptocurrencies due to Donald Trump

Analysis: From cause to effect — crypto crash blamed on Trump

1. The trigger: announcement of new tariffs and trade tensions

On October 10, Donald Trump announced he was considering imposing tariffs of 100 % on Chinese imports in retaliation for China's export controls on critical minerals. He also mentioned restrictions on the export of critical software to China. This announcement was perceived as a sign of a major escalation in the trade war.

Traditional markets reacted immediately: the S&P 500 index fell by more than 2%, and the Nasdaq also plunged. This stock market panic spread to riskier assets, including cryptocurrencies.

2. Contagion mechanism and domino effect

a) Risk aversion and a retreat to safe-haven assets

In a context of heightened uncertainty, investors tend to move away from volatile assets and seek refuge in more stable assets (gold, bonds, cash). Cryptocurrencies, perceived as "risky," are experiencing increased selling pressure.

b) Increased correlation with tech/equity markets

For some time now, Bitcoin (and other cryptocurrencies) has been perceived not as an independent asset, but as a "high beta" asset linked to technology markets. Thus, when tech stocks falter, cryptocurrencies amplify the fall. 

c) Mass liquidations and the “cascade” effect”

The initial drop triggered forced liquidations of leveraged positions (margin calls) on trading platforms. According to data, over $600 million in long positions were liquidated within hours. Some reports suggest that total liquidations in the crypto world that day were close to $1 billion. 

These liquidations further fuel the decline, as forced positions sell at low prices, widening the gap between supply and demand.

3. Effects observed on the crypto market

Bitcoin fell below 110,000 $, with potential pullbacks to around 105,000 $ at certain points. Altcoins (Ethereum, Solana, XRP) suffered more, with some losing between 5 and 20 %. Trading volume surged due to liquidations and panic selling. The overall crypto market is estimated to have lost hundreds of billions (in market capitalization) in just a few hours. 

4. Background aggravating factors

a) Already overbought market

Before the announcement, Bitcoin was flirting with all-time highs (~125,000 $). This overbought environment made the market vulnerable to a sudden reversal.

b) High debt/leverage

Many traders were using leverage to bet on the continued rise. The trigger caused a sharp reversal.

c) Political and regulatory uncertainty

The threat of presidential interventions, tax or regulatory changes introduces an additional level of uncertainty, giving investors a legitimate reason to reduce their exposure.

5. What are the key takeaways? (conclusions & lessons learned)

Trump's announcement was the initial spark, but the fall accelerated through classic market mechanisms (liquidation, domino effect, risk aversion). Cryptocurrencies are not independent of macro markets: their exaggerated reactions often reflect broader movements in equity and tech markets. An overbought market, high leverage, and an uncertain geopolitical context create an explosive combination.

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