The crypto market just took a nosedive, with Bitcoin crashing over 9% to 91,200 – causing carnage for leveraged traders. A staggering $2.2 Billion was wiped out in liquidations. Here’s what went down.

Tuesday, Feb. 3, recorded the worst single-day liquidations in the history of the crypto market, with traders losing $2.25 Billion in less than 24 hours. It is worse than the LUNA crash and breaks the $1.6 Billion liquidation record set by the FTX exchange saga in November 2022.

Coinglass: Crypto market Liquidation heatmap

The crash, which also saw the crypto industry lose more than $300 Billion – or 10% of its current market cap- was triggered by President Trump’s announcement of major tariffs against the USA’s three biggest trading partners – Canada, Mexico, and Canada.

Image of Trump’s Truth Social post announcing tariffs

The move spooked crypto investors who fear higher tariffs will increase inflation and interest rates. The rising inflation would, in turn, have institutional investors turn towards less risky investments like treasuries and bonds, sucking liquidity off the crypto market.

Bitcoin Traders Lose $412 Million to the Tariffs Crash

Bitcoin trades accounted for 18% of the $2.25 Billion wiped out in today’s market crash.

Leveraged long traders, who have been overly optimistic about a Trump presidency, bore the brunt of the contracting market as they lost $341 Million. In comparison, shorts only accounted for about $70 Million of the liquidations.

It is worth noting that over 85% of all the Bitcoin liquidations affected traders on five crypto exchanges.

Traders on Binance lost as much as $121 Million worth of cryptos to the crash, while others on OKX, Gate.io, HTX, and ByBit lost $72.9M, $57.8M, $54M, and $48M, respectively.

Bitcoin Already Hinting at a Possible Recovery

The crash saw BTC price suffer a sudden and violent price drop, slipping below $100k and falling as low as $91,200, according to data from CoinmarketCap.

CoinMarketCap: BTC price action after Trump Tariffs   

At the time of writing, however, Bitcoin has started showing signs of recovery and currently trades around $95,700. Also, the market sentiment towards legacy digital currency remains significantly bullish.