After Donald Trump revived a tariff war with China on Friday, crypto markets lost more than half a trillion dollars worth of market capitalization.
Less than 30 minutes after Trump’s 4:50pm post to Truth Social, the total market cap of crypto assets crashed $600 billion from above $3.9 trillion to $3.3 trillion.
In the midst of the panic, thousands of assets momentarily lost half of their value. Stomach-dropping candlesticks incinerated 99% at their worst.
Cosmos, for example, slipped 99.9% from over $3.90 to $0.001 on a tether (USDT) trading pair. It had partially recovered above $3 by Saturday.
Ravencoin also flash-crashed 99.9% on Binance’s USDT trading pair, dropping from $0.011 to $0.00001 in under 20 minutes.
As Trump floated additional tariffs of 100% after China threatened rare earth export restrictions, investors panicked into safe havens like gold and out of risk-on assets like crypto.
Polkadot plunged 83% during the panic from $3.79 to below $0.64. By late Saturday, it had recovered above $2.90 to close the week with a 29% loss.
Dogecoin halved within minutes during Friday’s panic from $0.225 to $0.115. After a slight retracement to $0.18, it closed the trading week with a seven-day decline of 25%.
Cardano crashed 64% from $0.77 to $0.28 on Binance within half an hour. Similarly, DigiByte crashed 55% from $0.0078 to $0.0035 during the same timeframe.
So many coins collapsed on Binance that it had to fork out $283 million in compensation to users liquidated on locally-depegged assets.
The proprietary token of the Pudgy Penguins NFT collection plummeted 72% from above $0.028 to $0.0077. Even after a partial recovery above $0.02 by Saturday, the token remained down 28% for the week.
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Shorting crypto ahead of the tariff war
Particularly profitable, bearish trades gained publicity during Friday’s panic.
Hyperliquid, which calls itself a decentralized exchange, published profits of two wallets belonging to a leveraged perpetual futures trader who joined the platform minutes prior to the news and profited over $190 million during the downfall.
The trader timed these trades so perfectly ahead of Trump’s tariff announcement that some investigators suspected advance knowledge.
Although traders indiscriminately sold off assets across global markets after Trump’s tariff announcement, crypto assets suffered particularly hard hits.
One explanation for the disproportionate impact is that major centralized exchanges often commingle customers’ collateral tied to their cross-margin positions, which fell in unison.
As swift declines liquidated smaller coins first, those coins’ serviced less margin to keep even larger coins afloat.
In other words, liquidations of thinly traded coins caused liquidations of more liquid coins, the liquidations cascaded due to crypto’s unique use of cross-margin collateral.
A record-breaking 1.6 million crypto accounts experienced liquidations on Friday. One trader lost $44.5 million in unrealized gains, which turned into a -$10 million loss.
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Source: https://protos.com/600b-gone-in-30-minutes-inside-cryptos-fastest-ever-flash-crash/