A significant downturn in the cryptocurrency markets was observed on Friday as escalating trade tensions between the U.S. and China sparked volatility. Amidst renewed threats from former President Trump regarding an impending increase in tariffs on Chinese goods, investor sentiment soured, leading to a sharp decline in major cryptocurrency assets.
Ethereum’s native token, ether (ETH), was the most affected within the CoinDesk 20 Index, plummeting by 7% from its session high. The token dropped to its lowest point since late September, falling below $4,100. In contrast, bitcoin (BTC) saw a more moderate decline of 3.5%, retreating from its price point above $118,000. Overall, the index faced a significant 5% plunge, reflecting the broader market weakness.
The downturn triggered a cascade of liquidations in the cryptocurrency derivatives market, contributing to over $600 million being wiped out in leveraged trading positions across all assets, according to data from CoinGlass. Ether led the liquidations, with more than $235 million in long positions—bets that aimed to capitalize on a rise in prices—liquidated throughout the trading session.
Technical analyses revealed a breakdown in key support levels for ETH, indicating that the selling pressure was fueled by several factors. Notably, at approximately 14:00 UTC, a spike in selling volume reached 372,211 units, nearly double the 24-hour average of 190,747 units. Resistance levels were confirmed around $4,287, and efforts to recover saw primary resistance at $4,141, which ultimately failed.
As prices approached critical thresholds, potential support emerged just below $4,100, where some buyers began to re-enter the market. The combination of geopolitical tensions and technical indicators suggests that traders remain cautious, with heightened volatility likely to persist in the near term.
