Bitcoin was hammered on Friday after Washington and Beijing reignited their trade conflict, triggering a global risk-off wave that cascaded across equities, commodities, and crypto markets. The world’s largest cryptocurrency plunged to $105,000 in one of its sharpest hourly drops this quarter before clawing back above $111,000 within minutes.
The fall coincided with new tariff threats from the White House, as President Donald Trump said the United States would raise duties on Chinese exports to 100% and impose export restrictions on critical software. The announcement rattled financial markets and revived fears of a trade war reminiscent of 2018.
China responded swiftly, introducing new port fees on U.S.-linked ships starting Oct. 14, mirroring the U.S. measures set for the same day. The escalating back-and-forth threatens to disrupt shipping lanes and supply chains already strained by months of political uncertainty.
The headlines hit risk sentiment hard. U.S. equities saw their worst single-day decline since April, with the Nasdaq tumbling over 3%. Bitcoin, which had recently traded near record highs above $125,000, moved in tandem with broader markets.
The Flash Crash
The crypto market’s reaction was swift and brutal. A surge in derivatives activity magnified the sell‑off, wiping out billions in leveraged positions. Data from exchanges showed over $8 billion in long liquidations in less than an hour as stop orders triggered in succession.
Analysts described the price action as a “textbook liquidation cascade.” Once spot prices dipped below key support around $110,000, thin liquidity and forced selling accelerated the drop to $105,000 before algorithmic and spot buyers stepped in.
By evening, Bitcoin stabilized near $113,800, still down nearly 8% on the day and around 13% for the week. The market’s total capitalization shrank to about $2.1 trillion, while trading volume spiked to nearly $100 billion, the highest since August.
Technical indicators confirm the turbulence. The Relative Strength Index (RSI) fell toward neutral territory around 45, cooling from heavily overbought levels earlier in the week, while the MACD flipped negative for the first time in weeks — a sign that bullish momentum is losing steam.
Bitcoin, often pitched as a hedge against monetary instability, tends to trade like a high‑beta risk asset during moments of global stress.
Despite the rebound from $105,000, sentiment remains fragile heading into the weekend. Traders are watching whether Bitcoin can hold above the $110,000–$112,000 range, which now serves as short‑term support. A failure to do so could invite another test of the $100,000 level, a key psychological line for the market.
Funding rates across derivatives exchanges have normalized after spiking earlier in the session, suggesting some speculative froth was washed out. However, open interest remains elevated, meaning volatility could persist if macro conditions worsen.
Scenarios Ahead
Should U.S. and Chinese officials temper their rhetoric or signal new talks, risk appetite could stabilize. Bitcoin may consolidate above $112,000 and rebuild toward $118,000, aided by renewed ETF inflows and spot buying.
If trade headlines continue to dominate, Bitcoin could oscillate between $105,000 and $120,000. This “grind phase” would allow leverage to reset but keep sentiment cautious.
A deeper rupture — such as formal tariff implementation or further export restrictions — could trigger another wave of liquidations. A decisive break below $105,000 would open the door to $95,000–$100,000, where longer‑term buyers may reemerge.