A flash crash triggered by rising U.S.-China trade tensions resulted in $19 billion in liquidated cryptocurrency positions on Friday. This marked the most significant single-day purge of leveraged bets in cryptocurrency history.

A flash crash triggered by rising U.S.-China trade tensions resulted in $19 billion in liquidated cryptocurrency positions on Friday. This marked the most significant single-day purge of leveraged bets in cryptocurrency history.

According to Santiment, President Trump’s posts on Truth Social are to blame. Trump accused Beijing of becoming “very hostile” and threatened massive tariff increases on Chinese goods in retaliation for export controls on rare earth metals.

According to Santiment, President Trump’s posts on Truth Social are to blame. Trump accused Beijing of becoming “very hostile” and threatened massive tariff increases on Chinese goods in retaliation for export controls on rare earth metals.

Bitcoin (BTC) dropped from approximately $124,000 to briefly touch $104,100 in a matter of hours before rebounding to $113,000.

Bitcoin (BTC) dropped from approximately $124,000 to briefly touch $104,100 in a matter of hours before rebounding to $113,000.

As of the last check on Sunday, Bitcoin was trading just below $112,000, down over 9% in the past week.

As of the last check on Sunday, Bitcoin was trading just below $112,000, down over 9% in the past week.

The selloff intensified about six hours after Trump’s initial post, with over 1.6 million estimated traders affected.

The selloff intensified about six hours after Trump’s initial post, with over 1.6 million estimated traders affected.

Of the $19 billion liquidated, approximately $16.6 billion came from long positions, while only $2.4 billion represented short position liquidations.

Of the $19 billion liquidated, approximately $16.6 billion came from long positions, while only $2.4 billion represented short position liquidations.

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Altcoins experience severe market dislocations

Altcoins experience severe market dislocations

While Bitcoin’s 12% temporary price drop led the headlines, altcoins faced more severe drawdowns during the crash.

While Bitcoin’s 12% temporary price drop led the headlines, altcoins faced more severe drawdowns during the crash.

Over the course of less than an hour, liquidations swept through leveraged positions, with percentage moves far exceeding Bitcoin’s decline:

Over the course of less than an hour, liquidations swept through leveraged positions, with percentage moves far exceeding Bitcoin’s decline:

• Litecoin (LTC), -51%

Litecoin (LTC), -51%

• Toncoin (TON), -41%

Toncoin (TON), -41%

• Dogecoin (DOGE), -39%

Dogecoin (DOGE), -39%

When forced liquidations begin, the relatively minor order books for altcoins compared to Bitcoin mean that price impacts are magnified as positions unwind.

When forced liquidations begin, the relatively minor order books for altcoins compared to Bitcoin mean that price impacts are magnified as positions unwind.

Santiment’s analysis noted that discussions related to U.S.-China tariff concerns spiked after the crash, with retail traders quickly reaching consensus about attributing the flush to geopolitical events.

Santiment’s analysis noted that discussions related to U.S.-China tariff concerns spiked after the crash, with retail traders quickly reaching consensus about attributing the flush to geopolitical events.

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Retail sentiment shifts to bearish expectations

Retail sentiment shifts to bearish expectations

For the first time in October, Santiment data showed a four-hour stretch where words like “lower” or “below” received higher mention frequency than “higher” or “above” in crypto discussions.

For the first time in October, Santiment data showed a four-hour stretch where words like “lower” or “below” received higher mention frequency than “higher” or “above” in crypto discussions.

The sentiment reversal occurred after months of predominantly bullish positioning, with the crash serving as a reminder that crypto remains vulnerable to sharp corrections.

The sentiment reversal occurred after months of predominantly bullish positioning, with the crash serving as a reminder that crypto remains vulnerable to sharp corrections.

Santiment noted that Trump and Xi relationship developments will likely remain central to trading decisions in the near term.

Santiment noted that Trump and Xi relationship developments will likely remain central to trading decisions in the near term.

If diplomatic talks yield positive developments, retail sentiment toward crypto is likely to improve correspondingly.

If diplomatic talks yield positive developments, retail sentiment toward crypto is likely to improve correspondingly.

However, if the relationship deteriorates further, Santiment warns that predictions of “Bitcoin sub-$100K” could become more prevalent among traders who reassess their risk.

However, if the relationship deteriorates further, Santiment warns that predictions of “Bitcoin sub-$100K” could become more prevalent among traders who reassess their risk.

Meanwhile, precious metals gained as traders sought tangible safe havens amid currency devaluation fears. Gold surged past $4,000 per ounce as Bitcoin exhibited behavior more consistent with risk assets than that of safe havens during periods of geopolitical tension.

Meanwhile, precious metals gained as traders sought tangible safe havens amid currency devaluation fears. Gold surged past $4,000 per ounce as Bitcoin exhibited behavior more consistent with risk assets than that of safe havens during periods of geopolitical tension.

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