Financial markets are on edge after Donald Trump’s new 100% tariffs on Chinese imports triggered a historic crypto market crash. Nearly $400 billion vanished from digital currencies within 24 hours, sending shockwaves through global trading floors and sparking fears of panic selling when Asian markets reopen.
$400bn Wiped Out in Hours
The meltdown began late Friday after Trump vowed to impose the steep levies within weeks, escalating his trade war with Beijing. Bitcoin plunged more than 10% overnight before slipping another 6% by Saturday. Analysts say the impact could deepen when traditional markets open on Monday.
The Bank of England is closely monitoring developments, though it declined to comment publicly. City traders expect a volatile week ahead, with futures markets already signaling potential drops of up to 6%.
Record Losses and Leveraged Wipeouts
Friday night marked one of the darkest days in crypto history. Traders using borrowed funds lost an estimated $19 billion in just hours — more than double the previous record loss set in 2021.
Many investors, driven by leverage, saw their entire portfolios erased. Marcus Sotiriou, a crypto analyst at Impact Fundry, said, “A lot of people will have been over-leveraged. I’ve seen multimillion-dollar portfolios wiped out overnight.”
Major exchanges struggled to handle the extreme volume. Binance issued an apology for “intermittent delays” caused by heavy market activity, while others temporarily froze trades to stabilize systems.
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Tragic Fallout
The crash’s emotional toll became evident after reports emerged that Ukrainian crypto entrepreneur Kostyantyn Ganich, known online as Kostya Kudo, died by suspected suicide in Kyiv. Police said the 32-year-old had told relatives he was under immense financial pressure.
His Telegram channel, followed by tens of thousands of crypto traders, confirmed his death, calling it a “tragic loss” for the community. The incident underscored the human cost of speculative trading and market instability.
Suspicions of Insider Trading
As the sell-off intensified, analysts noticed suspicious trading activity just before Trump’s announcement. Several anonymous accounts reportedly made nearly $200 million by betting against the market less than an hour before the tariff news broke.
Joshua de Vos of CoinDesk noted, “While there’s no conclusive proof of insider trading, the timing and size of these positions suggest information asymmetry.” Authorities have yet to launch a formal investigation, but speculation about advance knowledge of Trump’s remarks continues to circulate in crypto circles.
Tariffs Ignite Trade War Fears
Trump’s declaration reignites tensions between Washington and Beijing. The United States already levies 30% tariffs on Chinese goods, but Trump’s new proposal would push total duties to 130% — a record high.
In his statement, the former president accused China of being “very hostile” and attempting to “make life difficult for virtually every country in the world.” Beijing has not yet issued a response, though analysts warn the move could provoke swift retaliation.
China’s Rare Earth Retaliation
The latest escalation follows Beijing’s export restrictions on goods containing rare earth minerals — essential components in cars, missiles, and solar panels. These minerals power much of the world’s green technology, giving China significant leverage.
Trump’s aggressive response, economists say, aims to pressure China but risks destabilizing global trade networks already under strain. Nicolas Bickel, head of investment at Edmond de Rothschild, called the tariffs “a shock move that the market clearly did not expect.”
Markets Brace for Turbulence
Financial experts are preparing for a volatile week. Chris Beauchamp, analyst at IG, warned that “global markets are set up for a potentially chaotic Monday open.”
The timing couldn’t be worse. Investors were already anxious about a possible bubble in artificial intelligence stocks, inflated by speculative optimism. The Bank of England recently cautioned that tech valuations pose a “material risk” to Britain’s economy.
Adding to the tension, JP Morgan’s CEO Jamie Dimon warned of a looming “sharp correction” in stock markets, saying valuations “appear stretched.”
Shadow Banking Risks
Beyond crypto and equities, attention has turned to the $3 trillion private credit market, also called shadow banking. The sector, lightly regulated and dominated by private equity firms, is now under scrutiny following recent U.S. bankruptcies.
First Brands, an Ohio-based car parts maker, collapsed last month with $11.6 billion in liabilities. Around the same time, Tricolour, a major used-car retailer in Texas and California, filed for bankruptcy owing more than $1 billion. Both were heavily financed through private credit channels.
Deutsche Bank has warned that First Brands’ failure could be “a canary in the mine” for broader weaknesses in private debt markets. Shares in major private lenders — including Apollo, Blackstone, KKR, and Ares — have fallen nearly 18% over the past month, slipping another 4.5% on Friday.
A Storm of Uncertainty
The combined weight of Trump’s tariff threat, the crypto market collapse, and mounting fears over shadow banking have left global investors bracing for chaos. With Asian markets reopening soon and no signs of policy moderation from Washington or Beijing, analysts predict the coming week could redefine risk sentiment across financial systems.
City traders are preparing for emergency interventions from central banks if panic spreads. As one London trader put it: “This isn’t just about crypto anymore — it’s about confidence. And right now, confidence is in freefall.”
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