XRP, Dogecoin Plunge 25% as Crypto Liquidations Cross $2.2B on Tariffs Led Dump

Crypto Market Plunges Amid Trade War Fears

Major cryptocurrencies have witnessed a significant decline of over 25% within the past 24 hours, prompted by a fresh wave of tariffs imposed by the U.S. on Canada and Mexico. This development has raised concerns about a global trade war, negatively affecting investor confidence in risk assets.

XRP, Dogecoin (DOGE), and Cardano's ADA have plummeted by more than 25%, retracing all gains made since December and returning to pre-U.S. election levels from early November. Data indicates that most major cryptocurrencies have experienced a decline of 40-50% over the past month, marking one of the steepest drops in recent years. The overall market capitalization has decreased by 12%, the most significant decline observed in over a year. The broad-based CoinDesk 20 (CD20) has also lost 10%, while Bitcoin (BTC) has fallen by 6%.

The losses have been reflected in futures markets, with traders of Ether (ETH)-based products losing over $600 million in the past 24 hours, primarily during the early Asian trading session. XRP and DOGE trades have lost a combined $150 million, altcoin-based products have lost $138 million, and Ether-based futures have lost $84 million.

Total liquidations have exceeded $2.2 billion, marking the highest level this year and among the highest in the past year. The largest single liquidation occurred on Binance, involving a Tether-margined ETH trade valued at $25 million.

Analysts have warned of potential further losses as the week progresses. Augustine Fan, Head of Insights at SignalPlus, remarked that while BTC has declined by 8% over the weekend, Ethereum has experienced a "straight 20% decline" and is "behaving like an altcoin on the downside."

"Markets are likely to be in a full risk-off mode as we await the US equity market open," Fan added.

Liquidation occurs when a trader lacks sufficient funds to maintain a leveraged trade. Given the high volatility of the crypto market, liquidations are common, though significant events like Monday's can offer valuable insights into market sentiment and potential positioning.

The market correction is attributed to the trade war initiated by President Donald Trump, with 25% tariffs imposed on Canada and Mexico. This move has disrupted North American trade relations, leading to threats of retaliatory tariffs from both countries.

Financial markets are apprehensive about the potential for increased costs on goods, affecting industries ranging from automotive to agriculture. The interconnected economies of these nations suggest that tariffs could lead to a broader economic slowdown, impacting employment and raising consumer costs.