Market Turmoil: Major Tokens Experience Significant Decline
In a dramatic turn of events, major cryptocurrencies have plummeted by over 25% within the last 24 hours. This downturn follows the recent announcement of new tariffs imposed by the U.S. on Canada and Mexico over the weekend, which has sparked discussions of a potential global trade war. As a result, investor sentiment towards risk assets has soured markedly.
Among the most affected cryptocurrencies, XRP, Dogecoin (DOGE), and Cardano’s ADA have all experienced declines exceeding 25%, effectively erasing all gains accrued since December and dropping back to levels seen prior to the U.S. elections in early November. Data indicates that most major cryptocurrencies have witnessed a staggering drop of 40-50% over the past month, marking one of the steepest declines in recent years.
The overall market capitalization of cryptocurrencies has plummeted by 12%, representing the worst decline in over a year. Additionally, the broad-based CoinDesk 20 (CD20) index has lost 10% of its value, while Bitcoin (BTC) itself has fallen by 6% during this tumultuous period.
Futures markets have mirrored these losses, with traders engaged in ether (ETH)-related products incurring losses exceeding $600 million in just 24 hours, particularly during the early hours of trading in Asia. Cumulative losses from XRP and DOGE positions amounted to $150 million, while altcoin-related products suffered a loss of $138 million, and ether-tracked futures lost $84 million.
In total, liquidations across the market have surpassed $2.2 billion, marking the highest level recorded this year and ranking among the largest liquidation events seen in the past 12 months. The most significant single liquidation order occurred on the Binance exchange, involving a tether-margined ETH trade valued at $25 million.
As the week progresses, some traders have expressed concerns regarding potential further losses. “While BTC has declined over 8% over the weekend, it was Ethereum that truly shocked the market with a direct 20% drop. It is now behaving like an altcoin in terms of losses, lacking the support of long-term institutional investments and absent any near-term catalysts,” stated Augustine Fan, head of insights at SignalPlus, in a Telegram message to CoinDesk.
Fan further elaborated, “We witnessed massive long futures liquidations over the weekend, with more than $2 billion in futures stop-outs occurring within the last 24 hours, representing the sharpest liquidation event in the history of crypto. The markets are likely to remain in a full risk-off mode as we await the opening of the U.S. equity markets.”
Liquidation occurs when a trader lacks sufficient funds to maintain a leveraged position. The inherent volatility within the cryptocurrency market often leads to liquidations, although significant events like Monday’s downturn can provide critical insights into market sentiment and potential future positioning.
The current market correction appears to be a direct consequence of the trade war that U.S. President Donald Trump has seemingly instigated, with the imposition of 25% tariffs on Canada and Mexico. This move has already caused considerable disruptions in North American trade relations, prompting both nations to threaten retaliatory tariffs.
Financial markets are increasingly wary of the implications of these tariffs, which could lead to heightened costs for goods and adversely affect industries ranging from automotive to agriculture. The intertwined economies of these countries suggest that such tariff measures could precipitate a broader economic slowdown, jeopardizing jobs and increasing costs for consumers.
