The cryptocurrency market is experiencing one of its steepest declines in recent years, with major digital assets such as XRP, Dogecoin (DOGE), and Cardano (ADA) dropping more than 25%. This downturn has erased gains made before the U.S. election in early November, while most major cryptocurrencies have suffered losses of 40–50% over the past month.
Market capitalization has also taken a significant hit, falling 12% in a single day, marking the largest decline in over a year.
During the London trading session, leading cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and XRP posted substantial losses. Bitcoin was down 8% by mid-morning, trading above $93,100, according to Binance data.
Mass liquidations followed the sharp selloff, with over $2.23 billion in leveraged positions wiped out—the highest amount ever recorded by Coinglass.
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Nearly 730,000 traders faced liquidations, making this the worst day in the history of the crypto market. The largest single liquidation order occurred on Binance, where a $25.64 million ETH/BTC position was forcibly closed.
The market turmoil is not just a result of typical volatility or technical corrections; rising geopolitical tensions and trade restrictions are playing a major role in destabilizing global markets, including crypto.
The U.S., under President Donald Trump, has imposed new tariffs on major trading partners, including a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese goods set to take effect in February. In response, both Canada and Mexico have introduced retaliatory tariffs of 25% on U.S. goods, escalating economic tensions.
READ ALSO: Solana’s Price Dips Despite Record $258 Billion Milestone
Financial markets are now grappling with the potential consequences, including higher consumer prices, supply chain disruptions, and economic slowdowns that could spill over into the crypto sector.
Ethereum has been hit particularly hard, plunging 20% in a manner more typical of smaller, highly volatile altcoins. The lack of institutional inflows and short-term catalysts has left ETH vulnerable to broader market instability.
The newly imposed tariffs are also expected to disrupt the cryptocurrency mining industry, particularly in the U.S., where miners rely heavily on imported equipment. Higher prices for mining hardware—most of which is sourced from China—could increase operational costs and affect profitability.
Trade restrictions are posing a new challenge for the global mining sector. The majority of mining hardware, including GPUs and ASIC miners, is manufactured in China by companies such as Bitmain (Beijing) and Canaan (Hangzhou). Tariffs on these imports could make mining more expensive, particularly for U.S.-based operations.
Canada remains a significant player in Bitcoin mining, contributing around 7% of the global Bitcoin hash rate as of September 2023. However, retaliatory tariffs and shifting trade policies could impact Canadian miners as well.
Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum have announced strong responses to Trump’s trade measures.
Trudeau introduced 25% tariffs on American goods, emphasizing that Canada would not back down in defending its economy. Meanwhile, Sheinbaum directed Mexico’s economy minister to implement “Plan B,” a strategy designed to protect Mexico’s economic interests through tariff and non-tariff measures.
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