A sharp crypto sell-off followed a policy jolt from Washington. Late Friday, President Trump threatened a 100% tariff on Chinese goods. With stock markets closed, the first reaction hit venues that never sleep. Price gaps grew, liquidity thinned, and leverage cracked.
Another shock arrived when U.S. and UK authorities unveiled a sweep against a Cambodia-based fraud network, including custody of roughly $15 billion in Bitcoin. Concern rose over large off-exchange holdings, and risk appetite stayed weak.
What Happened in Markets
The weekend rout erased about $19 billion of leveraged positions and affected roughly 1.6 million accounts. Bitcoin dipped below $110,000. Ether slipped under $4,000. Altcoins fell harder on thin books. Forced liquidations drove most prints.
DeFi activity spiked during the scramble. DEX volumes climbed, and protocol fees jumped. Solana saw a two-way flow, with a rebound after the weekend, while weekly returns stayed negative. These signs point to funding stress rather than broken protocol use, which supports repair when volatility cools.
Data firms described a record one-day liquidation. Trade headlines tied to tariffs and new port fees pushed de-risking across futures and spot pairs. By Tuesday, bounce attempts met supply, and equity proxies linked to crypto fell in step.
“Last Friday, you saw volatility just jump across the board, not only for short-dated, but also for long-dated maturities. The sentiment around short-dated volatility is that more people are worried about downward turns,” said Derive.xyz Head of Research Sean Dawson, according to Reuters.
How Investors and Traders Felt It
Traders faced margin calls, forced unwinds, and wide spreads. Market makers cut inventory risk, and funding reset across major venues. Open interest fell. Some retail cohorts rotated to stablecoins. ETF flows slowed during the drawdown. Several desks framed the shock as a stress test rather than a structural break.
On-chain forensics now follow the sanctioned network and related wallets. Analysts detail laundering paths and links to mining. Tighter screening can improve float quality once volatility cools.
Why the Reset Can Set up the Next Phase
Deleveraging removes excess and lowers the chance of another disorderly cascade in the near term. Prior cycles often saw steadier advances after funding and basis reset. Three indicators matter now: Net creations into spot ETFs; Stablecoin issuance growth; Order book depth on top pairs during Asia and Europe sessions. A turn in those series often precedes price repair.
