Key Points
- The crypto market experienced its largest-ever liquidation event last Friday, with over $19 billion wiped out.
- A new tariff threat from U.S. President Trump against China triggered the crash. Bitcoin, Ether, and altcoins all saw massive price drops.
- Options traders are now aggressively betting on further declines, bracing for more volatility.
- Some analysts believe the crash has “cleaned out” excessive risk from the market.
The crypto market is on edge, with investors bracing for more volatility after a record-breaking crash last Friday. The massive sell-off, which was triggered by a new tariff threat from U.S. President Trump, resulted in the “largest liquidation event in crypto history,” wiping out over $19 billion in leveraged positions.
The plunge was brutal. Bitcoin, which had hit a new all-time high of over $126,000 just a week ago, at one point fell by more than 14%. Ether, the second-largest cryptocurrency, dropped over 12%. Altcoins got hit even harder, with some seeing their values cut in half.
While the market has recovered some of its losses since Trump softened his tone on China over the weekend, the fear is still palpable. Options traders are now aggressively buying “puts,” which are bets that prices will fall further. This suggests that many in the market are hedging against another potential freefall.
Despite the carnage, some analysts are seeing a silver lining. “The good news is that this (crash) has cleaned out the excessive leverage and reset the risk in the market, for now,” said Nic Puckrin of The Coin Bureau.
Others are pointing to the resilience of Bitcoin. One analyst noted that while money flowed out of Ether and other altcoins, the investor flows into Bitcoin have held up surprisingly well. This suggests that capital is rotating into the “blue-chip” crypto asset rather than leaving the market altogether.
