The cryptocurrency market has suffered a massive liquidation event. This weekend’s action followed an abrupt geopolitical shock. US President Donald Trump’s announcement of sweeping 100% tariffs on China caused the sudden downturn. Bitcoin’s price dropped sharply. The move triggered a cascade of forced selling that liquidated over $19.27 billion in leveraged positions across the crypto ecosystem.

Tariffs Cause $19 Billion Wipeout

The cause of the crash was simple: geopolitics. President Trump’s tariff threat sharply escalated trade tensions between the US and China. This caused global risk assets, including Bitcoin, to fall. Bitcoin, which recently traded near $112,477, quickly dipped. It hit an intraday low of $102,000 on major futures exchanges.

Tariffs Cause $19 Billion Wipeout

Source: Trump on Truth Social

This price movement inflicted historic pain on leveraged traders. Specifically, data from CoinGlass shows that approximately $19.27 billion in long and short positions were forcibly closed. Because the majority of this loss stemmed from traders betting on price increases (long positions), their automated liquidation orders pushed the price down further.

CFGI Confirms Market Terror

The speed of the sentiment change is remarkable. The CFGI reading of 27 marks the lowest level the index has recorded in almost six months.

For historical context, the Index last showed this level of fear on April 16, but Bitcoin’s price was significantly lower then, trading around $77,000. Therefore, the current combination of a price over $113,000 and an extreme fear reading of 27 indicates a high level of market distress relative to the asset’s current valuation.

This contrasts sharply with the market’s recent peak. Earlier this week, the Index recorded a Greed score of 71. That score coincided with Bitcoin’s new all-time high of $125,100. The rapid psychological shift from greed to fear highlights the market’s high sensitivity to unexpected macro news.

Analysts See the ‘Buy’ Signal Flashing

Quantitative analysts are focusing on the positive implications of this volatility. Andre Dragosch, Bitwise’s head of research for Europe, stated that the firm’s proprietary Sentiment Index generated a “strong contrarian buying signal.”

Analysts See the ‘Buy’ Signal Flashing

Crypto Sentiment Index is hinting at a “strong contrarian buying signal.” – Source: Andre Dragosch

Dragosch noted that the index reached an extreme reading of -2.8 standard deviations, which is exceptionally rare. It suggests a level of market selling pressure comparable only to the ‘Yen Carry Trade Unwind’ that occurred earlier in 2024.

A contrarian signal implies that market indicators have become so bearish that a reversal is statistically likely. The technical models view the current low prices as a temporary market dislocation. This presents an appealing price level for long-term capital that seeks to acquire assets at market lows.

Learn more: Standard Chartered: Bitcoin Will Hit $200,000 by the End of 2025

Highs Came Without the Hype

One positive factor suggests the crash will not last long. Brian Quinlivan, an analyst at Santiment, noticed something important. Bitcoin’s recent peak at $125,100 did not bring huge “euphoria” on social media.

Quinlivan explained that the reaction from the crypto community was “run-of-the-mill.” It was not crazy or overly exciting.

The quiet market peak is significant because it suggests the rally was built on a solid institutional base rather than speculative euphoria. As the current downturn stems from an external macro event and not internal weakness, the system still remains fundamentally healthy.

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