Bitcoin and ether experienced a significant decline on Tuesday amid escalating tensions between the U.S. and China. This downturn erased gains from the previous day, which had been bolstered by President Donald Trump’s hopeful trade comments. The tensions escalated further as both nations initiated additional port fees on shipping companies that transport various goods, including holiday toys and crude oil. This development marks a new chapter in the ongoing trade conflict between the two largest economies in the world.
During afternoon trading, the price of bitcoin fell to as low as $110,023.78, concluding the day down 2.3% at $113,129. Notably, bitcoin had reached a record high exceeding $126,000 just days earlier, on October 6. Meanwhile, ether, the second-largest cryptocurrency, dropped to a low of $3,900.80, finishing down 3.7% at $4,128.47. Just last Friday, ether had experienced a dramatic 12% decline from a high of $3,436.29.
The broader altcoin market faced even steeper challenges, with many cryptocurrencies plummeting by as much as 80% on various exchanges. Analysts observed that a significant factor contributing to the selloff was an automatic liquidation process on exchanges, where leveraged investors were forced to close their positions as collateral values fell below required thresholds.
Juan Perez, the director of trading at Monex USA in Washington, pointed out that the crypto market is likely to struggle as long as U.S.-China relations remain tense. He noted that cryptocurrencies tend to thrive when traditional assets are performing well, but when the underlying fundamentals are weak, it becomes challenging for digital currencies to maintain their value.
The price movements on Tuesday followed the crypto market’s largest recorded liquidations, with over $19 billion evaporated from leveraged positions on Friday. This sharp decline was triggered by Trump’s announcement of a 100% tariff on Chinese imports in response to China’s decision to expand its export controls on rare earth materials.
