Major tokens have experienced a staggering slump of more than 25% in just 24 hours, following the imposition of new tariffs by the United States on Canada and Mexico. This development has sparked discussions of a potential global trade war, leading to a significant souring of sentiment for risk assets.
XRP, dogecoin (DOGE), and Cardano’s ADA have all fallen over 25%, erasing all gains made since December and reverting to pre-U.S. election levels observed in early November. Data indicates that most major cryptocurrencies are down between 40% and 50% over the past month, marking one of the steepest declines in recent years. The overall market capitalization has plummeted by 12%, representing the worst fall in over a year, while the broadly-based CoinDesk 20 index (CD20) has lost 10%. Bitcoin (BTC) has also seen a decline, dropping by 6% during this tumultuous period.
Futures markets have reflected these losses, with traders of ether (ETH)-related products suffering losses exceeding $600 million in the past 24 hours, primarily during early Asian trading hours. XRP and DOGE positions collectively lost around $150 million, while altcoin-tracked products faced losses of $138 million, and ether-tracked futures lost $84 million.
Total liquidations have crossed a staggering $2.2 billion—marking the highest level this year and one of the largest seen in the past 12 months. The largest single liquidation order occurred on Binance, involving a tether-margined ETH position valued at $25 million. Experts are cautioning traders about the potential for further losses as the week unfolds. Augustine Fan, head of insights at SignalPlus, commented, “While BTC has experienced an over 8% decline over the weekend, Ethereum shocked the market with a straight 20% drop, exhibiting altcoin-like behavior without the benefit of long-term institutional inflows and a lack of immediate catalysts.”
Fan further noted the massive long futures liquidation observed over the weekend, stating that over $2 billion in futures were liquidated in the past 24 hours— marking the sharpest liquidation event in cryptocurrency history. He added, “Markets are likely to adopt a full risk-off stance as we await the opening of the U.S. equity market.”
Liquidation occurs when a trader lacks sufficient funds to maintain a leveraged trade. The inherently high volatility of the cryptocurrency market makes liquidations a frequent occurrence; however, significant events like Monday’s plunge can provide critical insights into prevailing market sentiment and positioning.
The catalyst for this market correction appears to be the trade war seemingly ignited by U.S. President Donald Trump, as 25% tariffs are imposed on Canada and Mexico. This aggressive move has induced immediate disruptions in North American trade relations, with both countries threatening retaliatory tariffs.
Financial markets are deeply concerned about the potential for escalated costs on goods across various industries, from automotive to agriculture. Given the interconnectedness of these economies, the imposition of tariffs could lead to a more widespread economic slowdown, threatening employment and elevating costs for consumers.
