Crypto suffers its biggest liquidation on record
On February 3, after Donald Trump’s remarks about aggressive tariffs on imports into the United States, total crypto market capitalisation fell by 11.7% to $3.16 trillion.
American authorities are imposing additional 25% levies on imports from Canada and Mexico, and 10% on goods from China. Trump also said he intends to take similar steps on trade with the EU.
Bitcoin’s price extended its decline, hitting a low of $91,281. At the time of writing the leading cryptocurrency trades near $94,500 with a market capitalisation of $1.87 trillion.
Altcoin rout and rising bitcoin dominance
Ethereum fell below a three-month low of $2400. After a modest rebound it trades around $2600.
XRP from Ripple dropped below $2, shedding more than 20% of its market value within hours. At the time of writing the price has recovered above $2.5.
Heavy drawdowns hit many large altcoins—ADA (about 30%), AVAX (25%), DOGE (24%) and LINK (23%) lost over 20% of market capitalisation.
Amid the market-wide slide, the crypto portfolio of the Trump-linked project World Liberty Financial (WLFI) fell by $51.7 million (-21%).
World Liberty Financial’s $242.77M crypto investment made between Jan 19 and 31 is now down over $51.7M (-21%) after Trump’s new tariffs rattled the markets!
Their top 3 biggest losses include:
• $ETH: -$36.7M (-24.4%)
• $WBTC: -$8M (-12.1%)
• $ENA: -$2.05M (-43.7%)Trump… https://t.co/5BxSnpAubl pic.twitter.com/7B45g73oLl
— Spot On Chain (@spotonchain) February 3, 2025
Bitcoin dominance topped 64%. At the time of writing the gauge is 61.7%.
The biggest liquidation on record
The sharp sell-off produced the largest liquidation in crypto history—about $2.27 billion, according to CoinGlass.
Over the past 24 hours, positions worth $615.72 million in ETH pairs, $417.77 million in BTC and $123.3 million in XRP were forcibly closed.
The worst liquidation day in history of #Crypto & #Altcoins.
More worse than FTX or Luna.
— Michaël van de Poppe (@CryptoMichNL) February 3, 2025
“The worst day of liquidations in the history of cryptocurrencies and altcoins. Much worse than [the] FTX or Luna [collapses],” noted analyst and MN Trading founder Michaël van de Poppe.
According to Bybit co-founder and CEO Ben Zhou, the published liquidation tallies are materially understated, and the real figure was at least $8 billion.
I am afraid that today real total liquidation is a lot more than $2B, by my estimation it should be at least around $8-10b. FYI, Bybit 24hr liquidation alone was $2.1B, As you can see in below screenshot, Bybit 24hr liquidations recorded on Coinglass was around $333m, however,… https://t.co/4WLkPxTYF4 pic.twitter.com/woTOHQvNkt
— Ben Zhou (@benbybit) February 3, 2025
The entrepreneur explained that over 24 hours on Bybit alone, liquidations reached roughly $2.1 billion, whereas analytics services counted only $333 million because of limitations in the API.
Zhou is convinced other exchanges work the same way, so their figures may be inaccurate as well.
Implications for crypto and the macroeconomy
Economist Alex Krüger argues the announced tariffs were “significantly worse” than markets had expected. This will weigh on the stock market and the US economy at large.
Have seen quite a few takes about how tariffs are good for bitcoin or good for the US economy or how this is just market manipulation. But bitcoin is mainly a risk asset. Tariffs this aggressive are very negative for risk assets. And the economy will take a hit.
The tariffs…
— Alex Krüger (@krugermacro) February 2, 2025
He considers the situation particularly unfavourable for “risk assets”, among which he includes bitcoin.
“What gives crypto hope is that the market has already sold off heavily in anticipation [of the tariff news], potentially limiting the depth of the fall. This applies especially to altcoins, which were practically destroyed,” Krüger added.
He stressed that in the coming days market moves will largely depend on headlines, and the trend could go either way.
“I am torn between the whole market reaching a local bottom on Monday or BTC testing the bottom of the range ($90,000) again. Perhaps both,” the economist suggested.
He hopes that US trading partners’ retaliatory measures “will not be extreme” and that countries will quickly “find common ground” to lower tariffs sooner.
Krüger believes that amid the authorities’ aggressive policy the dollar’s dominance will strengthen. But the economy will soon feel the hit, leading to a weaker currency.
Prime Minister Justin Trudeau has already announced plans to impose matching 25% tariffs on about $105 billion of American imports. Mexico’s authorities are preparing a response, but have yet to provide details.
The US president intends to hold talks with the leaders of the two neighbouring countries on Monday, February 3.
Under preliminary plans, the new tariffs will take effect on Tuesday, February 4.
In early February, a CryptoQuant contributor known as Crypto Dan warned of an imminent “top” and a possible shift in market phase.
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