Panic hit the crypto tape as a surprise announcement of a 100% tariff on Chinese imports from former U.S. President Donald Trump sparked a fast, mechanical sell-off. Within hours, over $19B in liquidations flushed across derivatives venues, BTC wicked to roughly $104,782, and ETH shed nearly 6%. The headline was tariffs—but the engine under the hood was crowded leverage meeting a geopolitical shock. Here’s what actually moved, why it matters, and how to trade the next 72 hours with discipline.

What just happened

A tariff shock revived U.S.–China trade-war fears, triggering a broad risk-off move. Perps led the dump as overleveraged longs were forced out, cascading into spot weakness. On-chain and derivatives data pointed to overleveraging ahead of the event, magnifying the downside as liquidity thinned and bids stepped out.

Why this matters to traders

- Geopolitical headlines are volatility catalysts that can invert correlations and funding in minutes. - Forced deleveraging creates both overshoot risk and short-lived bounce opportunities. - Structural tells—funding, open interest, liquidation heatmaps—guide edge more than the headline itself.

The setup beneath the crash

Markets were primed with elevated speculative exposure. When the tariff tweet hit, OI and funding snapped lower, and liquidation clusters were targeted. The flush tested key liquidity near round numbers, with algos hunting stops before price discovery stabilized.

Actionable playbook for the next 72 hours

• Trade the reaction, not the headline: wait for a 15–60 min volatility contraction and a higher low before attempting mean reversion.
• Hedge, don’t hope: consider short-perp hedges against spot or buy defined-risk puts; avoid adding leverage into expanding volatility.
• Fade only with confirmation: look for funding flipping negative and declining OI to suggest the bulk of forced sellers are done.
• Use staged entries/exits: scale in around liquidity pockets and scale out into prior breakdown zones on declining momentum.
• Respect invalidation: predefine max daily loss and hard stops; widen position sizing rules when ATR expands.

Key signals to track

• Open Interest: A clean reset followed by a slow rebuild favors sustainable bounces; sharp OI re-adding into green candles warns of bull traps.
• Funding and Basis: Deeply negative, stabilizing funding and normalized basis often precede relief rallies.
• Spot vs. Perp Lead: Spot-led bids with perps lagging is healthier than perp-led squeezes.
• ETH/BTC: Relative strength in ETH/BTC hints at improving risk appetite; continued underperformance = defensive posture.
• Stablecoin flows: Net inflows to exchanges can front-run dip buying; outflows signal lingering fear.

Risks to respect right now

- Escalating tariff rhetoric or Chinese retaliation headlines. - Weekend/after-hours liquidity air pockets. - Exchange outages and slippage during liquidation waves.

Bottom line

The crash was a leverage story catalyzed by geopolitics. For disciplined traders, the edge is in letting the purge run its course, then executing with hedges, staged orders, and strict invalidation. The first bounce is often violent; the second test reveals whether trend or chop wins—trade small, wait for confirmation, and let signals lead.

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