$150 Billion Wipeout: Cryptocurrencies Retreat as U.S.-China Conflict Weighs on Risk Assets

Digital currencies continued their decline after a weekend marked by massive liquidations and a sharp market selloff, as escalating trade tensions negatively affected high-risk assets. On Tuesday in New York, Bitcoin, the foremost digital asset, decreased by up to 5%, dropping just below $110,000, while Ether experienced a 9.3% fall to under $3,900. Other smaller, more volatile tokens also saw losses, resulting in a reduction of the total cryptocurrency market capitalization by more than $150 billion within 24 hours, according to CoinGecko.

This downturn coincided with China's retaliatory measures against the U.S. by imposing restrictions on the American divisions of a significant South Korean shipbuilder, in response to U.S. actions targeting Chinese shipping. The initial, harsh selloff began on October 10 and involved the liquidation of approximately $19 billion in leveraged crypto positions, following a threat from U.S. President Donald Trump to impose steeper tariffs on China over new export controls. Although digital-asset markets briefly recovered to reduce losses on Monday, most major tokens have since resumed their descent. The renewed U.S.-China friction has similarly exerted downward pressure on global equities, with markets across the U.S., Europe, and Asia showing losses on Tuesday.

The weekend's intense selloff prompted a drastic reset for the crypto space, evidenced by investors withdrawing $756 million from U.S. Bitcoin and Ether exchange-traded funds on Monday, highlighting widespread trader anxiety. Timothy Misir of BRN suggested that a sustained move below $110,000 for Bitcoin would likely trigger a test of the $104,000 to $108,000 liquidity zone. Analytics firm Glassnode noted that the market is now entering a "consolidation phase" characterized by increased caution, selective risk-taking, and a more measured effort to rebuild confidence in both spot and derivatives markets.

These significant price fluctuations have also impacted publicly traded companies heavily invested in digital tokens; for instance, Japan's Metaplanet Inc. saw its stock drop 12% to a five-month low in Tokyo on Tuesday, causing its enterprise value to dip below the value of its Bitcoin reserves for the first time.