Crypto prices are rebounding after a tariff-shock selloff that triggered one of the largest liquidation waves in history; Bitcoin and major altcoins have recovered materially as traders covered shorts and volatility normalized.
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Tariff announcement triggered massive liquidations across crypto and equities.
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Nearly $20 billion in single-day crypto liquidations, with $16.7 billion from long positions (CoinGlass).
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Short-covering and reduced open interest drove a relief rally: BTC +5%, ETH +10.5% (CoinGecko).
Crypto prices rebounding after tariff-shock selloff — Bitcoin and altcoins recover as traders cover shorts; read the latest market data and expert analysis from COINOTAG.
What is causing crypto prices to rebound after the tariff-shock selloff?
Crypto prices rebounding reflect a rapid shift from panic selling to short-covering and mean reversion after a tariff-related geopolitical shock. Strong intraday liquidations cleared levered positions, volatility spiked, and buyers stepped in as derivatives open interest reset, prompting a relief rally across major tokens.
How large were the liquidation losses and who was hit hardest?
The sell-off produced one of the market’s largest single-day liquidation events. CoinGlass data shows nearly $20 billion wiped out across digital assets in one day, with about $16.7 billion in long positions. Earlier in the session, CoinGecko-tracked prices saw Bitcoin fall from $121,000 to $109,000 in seven hours, Ethereum dip to $3,686 and Solana touch just above $173. Sean Dawson, head of research at on-chain options platform Dervie, described a near $7 billion one-hour “flash crash of liquidations,” including roughly $5.5 billion of long liquidations in that hour.
Why did markets react so strongly to the tariff announcement?
The market response followed a high-profile announcement that a planned bilateral meeting was canceled and that a “massive increase” in tariffs on Chinese imports was being ordered. Equity indices fell sharply—Nasdaq -3.6%, S&P 500 -2.7%, Dow -1.9%—amplifying crypto volatility. Concurrent moves from Beijing to curb exports of rare earths and critical minerals intensified the geopolitical shock, prompting broad risk-off positioning across asset classes.
Market mechanics: Why the rapid rebound?
After the initial panic, the rebound was driven by several technical and market-structure factors. Thin selling pressure at distressed levels allowed buyers to restore price equilibrium quickly. Derivatives markets saw open interest reset, forcing deleveraging that produced concentrated moves both down and then up as shorts were covered. Dean Serroni, CEO of Merkle Tree Capital, called the recovery a “textbook relief rally,” noting that Ethereum’s 11% surge during the rebound was “pure short-covering and mean reversion.” These dynamics are consistent with historical post-liquidation recoveries when the shock is geopolitical rather than structural.
Frequently Asked Questions
How did Trump’s tariff announcement affect Bitcoin and major altcoins long-term?
Short-term, the tariff announcement caused sharp price declines and heavy liquidations across leveraged positions. Long-term impact depends on subsequent policy actions and economic data; absent sustained trade escalation, current evidence suggests a temporary risk-off episode corrected by market participants. Sources: CoinGecko, CoinGlass, Dervie.
Did the market recover because of policy changes or trader behavior?
It recovered largely due to trader behavior—short-covering, reduced open interest in derivatives, and opportunistic buying—rather than immediate policy reversals. By the weekend, signs of de-escalation and analyst commentary pointed to a geopolitical overreaction that eased selling pressure.
Key Takeaways
- Immediate cause: A tariff announcement and geopolitical tensions sparked a large, rapid sell-off across equities and crypto.
- Scale of impact: Nearly $20 billion in single-day crypto liquidations, with the bulk from long positions (CoinGlass); one-hour flash liquidations approached $7 billion (Dervie).
- Recovery mechanics: Relief rally driven by short-covering, mean reversion, and thinning sell pressure—Bitcoin +5% to $115,100 and Ethereum +10.5% to $4,138 on the rebound (CoinGecko).
Conclusion
The sell-off was a pronounced but, per market participants, temporary response to a geopolitical tariff shock rather than a structural breakdown in crypto markets. Data from CoinGecko and CoinGlass, plus commentary from industry researchers at Dervie and investment managers including Merkle Tree Capital, indicate the rout was followed by a classic relief rally as leverage adjusted and buyers returned. COINOTAG will continue to monitor price action and derivatives activity and provide timely updates as new official data and policy developments emerge.
