Trump’s Tariff Threat Sparks $16B Crypto Liquidation, USDe Briefly Loses Peg

A warning from former U.S. President Donald Trump about imposing 100% tariffs on Chinese imports triggered a global market rout on Friday, erasing $16 billion in leveraged crypto longs and briefly pushing Ethena’s stablecoin USDe below its $1 peg.

The sell-off accelerated through early Asia trading hours, with traders bracing for renewed trade tensions between the world’s two largest economies. The resulting risk-off sentiment cascaded across digital asset markets, marking one of the largest long-side liquidations in months.

Bitcoin fell below $110,000 at one point before rebounding to $113,294, while Ether recovered to $3,844. The CoinDesk 20 Index slumped 12.1%, underscoring the breadth of the decline across major tokens.

Crypto’s total market capitalization dropped to $3.87 trillion, with approximately $16.7 billion of the $19.1 billion in total liquidations coming from long positions, according to CoinGlass data. Ethena’s USDe briefly touched $0.9996 — a small deviation that nonetheless reflected heightened peg stress amid extreme derivatives volatility.

Friday’s liquidation volume dwarfed those seen during the 2022 FTX collapse or the COVID-era market panic, exceeding them by more than tenfold in nominal terms. However, the percentage drawdown was less severe, reflecting crypto’s vastly larger market size today.

CoinGlass noted on X that the “actual total is likely higher,” citing delayed reporting from Binance, the world’s largest crypto exchange.

Ethena Labs assured users that USDe minting and redemption remained fully functional throughout the turmoil. The team emphasized that the stablecoin’s overcollateralization had improved as short positions realized gains during the correction.

The turbulence comes as a U.S. government shutdown stalls the release of key economic indicators, leaving traders without official data to gauge market direction just as fears of a renewed trade war dominate headlines.