Crypto Rebounds After US–China Trade Shock
The Crypto Market's Spectacular Comeback After the US-China Trade War Crash
The global cryptocurrency market recently experienced one of its most volatile periods in history, with a sharp decline followed by a significant recovery. This event was triggered by unexpected developments in the trade war between the United States and China, highlighting digital assets' sensitivity to macroeconomic geopolitical shifts and liquidation risks on exchanges.
The Historic Crash: Crypto Market “Bleeds” Following Trump's Statements
In late Friday, October 10, 2025, a wave of panic swept through global financial markets, and the cryptocurrency market was no exception. The direct cause was US President Donald Trump's shocking announcement to impose a 100% tariff on all imports from China, effective November 1. Not stopping there, Trump also threatened to control exports of critical software and technology, citing China's “extremely aggressive” moves in threatening to tighten exports of rare earth minerals – essential materials for semiconductor chip production and high technology.
Causes of the Shock
These statements sparked fears of a full-blown trade war, pushing investors to sell off risky assets in search of safe havens.
Devastating Impact on Market Cap and Major Coins
Market Capitalization: The total cryptocurrency market cap “evaporated” by nearly 200 billion USD within hours of Trump's second announcement, and approximately 300 billion USD total during the entire downturn, from about 4.25 trillion USD to 4.05 trillion USD.
Bitcoin (BTC): The world's largest digital currency, which had just hit an all-time high above 125,000 USD previously, sharply dropped from around 122,000 USD to 107,000 USD, at times falling as low as 102,000 USD or 104,600 USD on exchanges.
Ethereum (ETH): Also heavily impacted, declining by over 15% and at one point falling below 3,500 USD from above 4,100 USD.
Other Altcoins: Many major altcoins like XRP, BNB, Solana decreased by over 15-20%. Notably, coins such as Dogecoin (DOGE), HYPE, and AVAX at times plunged by 50% to 70% of their value.
Record Liquidations and Leverage Risks
This event was described as the largest liquidation wave in cryptocurrency market history, with over 19 billion USD in leveraged positions “blown away” in just 24 hours, leading to more than 1.6 million traders having their accounts “wiped out.” Even the stablecoin Ethena USDe temporarily lost its peg to the USD.
This once again confirms the inherent risks of using excessively high leverage in a market without circuit breakers like traditional stocks, leading to severe cascading liquidations.
The Unexpected Resurgence: De-escalation Signals from Both Sides
However, just a few days later, the cryptocurrency market demonstrated an incredible ability to recover. The recovery momentum began strongly early the following week, specifically on October 13, 2025.
Causes of Recovery
The market was boosted by conciliatory statements from President Trump and Vice President JD Vance. Both expressed goodwill towards a new agreement with China, suggesting that the 100% tariffs might not be implemented and that the US did not wish to “harm” China. The Chinese side also reassured that rare earth mineral export restrictions would be limited in scope, not a comprehensive ban.
Market Regains Growth Momentum
Market Capitalization: The total cryptocurrency market cap quickly reclaimed the 4 trillion USD mark on Monday morning.
Bitcoin (BTC): Recovered back above 114,000 USD, trading around 115,000 - 115,600 USD, an increase of approximately 3-4.53% in 24 hours. However, by October 15, Bitcoin slightly dipped to around 112,481.55 USD as tensions persisted.
Ethereum (ETH): Recorded a stronger increase of over 8-11.2%, rising to approximately 4,100 - 4,155 USD.
Other Altcoins: XRP, Solana, Cardano, Chainlink, and BNB also saw price increases, regaining most of their prior losses.
Crypto-Related Stocks: Shares of cryptocurrency-related companies like Bitfarms, Cipher Mining, Marathon Digital, and Hut 8 also surged, reflecting positive sentiment in traditional markets.
Market Sentiment and Indispensable Lessons
This crash and recovery offer valuable lessons for cryptocurrency investors.
Before and During the Crash: From Euphoria to Panic
Before the crash, the crypto market had experienced a strong growth phase, partly due to Mr. Trump's shift in stance from skepticism to supporting crypto. However, when the crisis hit, panic sentiment drove investors to safe-haven assets like gold (setting a new record above 4,120 USD/ounce) and government bonds.
This event was a “black swan” that demonstrated digital asset investors' extreme sensitivity to geopolitical volatility.
The Danger of Excessive Leverage
The 19 billion USD liquidation is a strong warning about the risks of using excessive leverage. In a news-sensitive market like crypto, high leverage can amplify losses to catastrophic levels.
Caution Remains the Top Priority
Although the market has recovered, investor sentiment is still characterized by caution and “holding their breath,” fearing potential further volatility if US-China tensions escalate again. Leverage ratios on derivative exchanges have dropped to their lowest levels since the 2022 crash, indicating that the market is “purging” leverage and could be heading towards a healthier recovery phase.
Long-Term Impact and Global Supply Chains
Analysts warn that the combined impact of tariffs and export restrictions could strain global technology supply chains, particularly in semiconductors, AI, and blockchain infrastructure, increasing long-term uncertainty for digital assets.
Conclusion
The crash and recovery of the crypto market following US-China trade tensions provided a deep insight into its vulnerability to global macroeconomic events, especially when combined with high leverage. Although there are signs of stabilization, investors remain highly vigilant regarding future geopolitical developments and must prioritize risk management to protect their portfolios.
Disclaimer: The content above reflects the author’s personal views and does not represent any official position of Cobic News. The information provided is for informational purposes only and should not be considered as investment advice from Cobic News.