The cryptocurrency market is in turmoil as a massive selloff, triggered by escalating trade tensions between the U.S. and its North American neighbors, has wiped out billions in value. XRP, Dogecoin (DOGE), and Cardano’s ADA are among the hardest hit, each plunging over 25% to erase months of gains. The market rout has left investors reeling and raised concerns about the potential fallout from a global trade war.
Altcoins Lead the Plunge as Liquidations Soar
The altcoin market has been at the epicenter of the crypto crash, with major tokens like XRP, DOGE, and ADA bearing the brunt of the losses. These digital assets have seen their value plummet by 40-50% in just the past month, marking one of the steepest declines in recent memory.
The carnage has been widespread, with the overall crypto market cap shedding 12% in a single day – the worst daily performance in over a year. Even the more resilient CoinDesk 20 index, which tracks a basket of leading cryptocurrencies, couldn’t escape the downdraft, falling 10%. Bitcoin, often seen as a safe haven in turbulent times, also succumbed to the selling pressure, dropping 6%.
Trade War Fears Ignite Risk-Off Sentiment
The catalyst for the crypto rout appears to be the sudden escalation in trade tensions between the United States and its neighbors to the north and south. Over the weekend, the Trump administration abruptly imposed 25% tariffs on Canada and Mexico, sparking fears of retaliatory measures and a full-blown trade war.
The prospect of rising costs, supply chain disruptions, and a broad economic slowdown has sent shockwaves through financial markets. Industries from automotive to agriculture are bracing for impact as the interconnected economies of North America face unprecedented uncertainty.
Futures Markets Reflect Carnage as Liquidations Mount
The fallout from the trade tensions and crypto plunge has been swift and severe in futures markets. Traders of ether (ETH)-tracked products alone have seen over $600 million in liquidations over the past 24 hours, mostly in early Asian trading. XRP and DOGE futures have also been hit hard, with a combined $150 million in losses.
Altcoin-tracked futures have shed $138 million, while $84 million in ether positions have been wiped out. All told, total liquidations have surpassed $2.2 billion, marking the heaviest such event this year and ranking among the most severe in the past 12 months.
Massive long futures liquidation was observed over the weekend with over 2 billion in futures stop outs over the past 24 hours, the sharpest liquidation event in crypto history. Markets are likely to be in a full risk off mode as we await the US equity market open.
– Augustine Fan, head of insights at SignalPlus
Market Braces for Further Losses Amid Uncertainty
As the new trading week gets underway, crypto investors are bracing for the possibility of further losses. With sentiment souring and trade war fears mounting, analysts say risk aversion is likely to remain the dominant theme in the near term.
For major tokens like XRP, DOGE, and ADA, the path to recovery may be long and arduous. Having surrendered months of gains in the blink of an eye, these digital assets now find themselves back at pre-election levels from early November. Without fresh catalysts to reignite demand, the road ahead looks challenging.
As for the broader crypto market, much will depend on how the trade tensions between the U.S. and its key partners unfold in the coming days and weeks. With so much uncertainty in the air, investors may opt to steer clear of riskier assets until the dust settles and the economic implications become clearer. For now, the market remains on edge, bracing for the next twist in an increasingly unpredictable and volatile environment.
