Bitcoin smashed through a new all-time high on Monday. Four days later, it’s bleeding.
The latest blow came Friday morning when President Trump floated massive new tariffs on China. Bitcoin plunged from $122,000 to below $119,000 in minutes. Ether, Solana, and XRP all joined the bloodbath.
So much for that record rally. Instead of FOMO, traders got fear.
Trade War Talk Kills the Rally
Trump posted on Truth Social that he’s planning a “massive increase” in tariffs on Chinese goods. This came hours after China imposed export controls on rare earth metals.
Markets reacted instantly. Bitcoin dropped 3% within minutes. But the crypto crash went deeper than just BTC.
Ether fell even harder. Solana tumbled. XRP crashed alongside them. Trading volumes spiked 164% above the 30-day average as traders scrambled for exits.
Crypto stocks felt the pain too. Circle dropped over 6%. Robinhood and Coinbase each shed 5%. MicroStrategy slipped 3%.
Traditional Markets Freaked Out Too
The damage spread far beyond crypto. WTI crude oil plunged nearly 4% below $60 per barrel—its weakest price since early May.
The S&P 500 fell 1.6%. The Nasdaq dropped 1.3%. Meanwhile, gold rallied more than 1% back above $4,000 per ounce.
That gold rally tells you everything. When trouble hits, investors still run to gold, not bitcoin. Despite years of “digital gold” marketing, BTC remains a risk-on asset that gets sold when fear spikes.
Plus, this pattern keeps repeating. Bitcoin hits a new high, then immediately retreats when macroeconomic uncertainty returns.
The Four-Day Round Trip
Bitcoin peaked above $126,000 on Monday. That was supposed to be the moment when bulls finally won. New all-time high. Clear breakout. Momentum building.
Instead, the rally died fast. By Friday, BTC sat around $118,800—down about 6% from Monday’s peak.
So the entire move evaporated in four trading days. No sustained FOMO. No retail rush to buy the breakout. Just another failed attempt to hold new highs.
This isn’t the first time either. Bitcoin repeatedly hits resistance at psychological levels, then sells off on any negative news. The pattern has become predictable.
Liquidations Piled Up
The sudden drop triggered massive liquidations across crypto markets. Early reports suggest over $7 billion in long positions got wiped out.
XRP got hit especially hard. It crashed as much as 42% at one point, dropping to $1.64 before partially recovering to $2.36. Institutional futures open interest decreased by $150 million as long positions got demolished.
Combined spot and derivatives trading volumes surged. August already saw $9.72 trillion in monthly volume—the highest of 2025. But this latest volatility pushed activity even higher.
Gate exchange emerged as a major player recently, with volumes surging 98.9% to $746 billion. It overtook Bitget to become the fourth-largest platform. These exchanges profit from volatility, even when traders lose money.
Why This Matters for Crypto
The swift selloff exposes a fundamental problem. Bitcoin still can’t break free from traditional market correlations.
When geopolitical tensions rise, crypto gets sold alongside stocks. When the dollar strengthens, bitcoin weakens. When trade wars escalate, digital assets act like tech stocks, not safe havens.
This kills the “store of value” narrative. Gold rallied during the same selloff that crushed bitcoin. That tells you which asset investors actually trust when things get scary.
Moreover, the quick reversal from all-time highs shows weak hands dominate the market. Long-term holders might stay patient. But enough traders buy high and sell at the first sign of trouble to prevent sustained rallies.
What Comes Next
Trade war tensions aren’t going away. Trump’s tariff threats could escalate further. China has already retaliated with rare earth export controls. More moves are likely coming.
That means more volatility ahead. Bitcoin might find support around $115,000, but nothing’s certain. If macro conditions worsen, another leg down seems possible.
On the flip side, sentiment can shift fast in crypto. One positive catalyst could spark another rally attempt. But sustainable gains require more than just momentum—they need actual improvement in fundamentals or macroeconomic conditions.
The bigger issue is credibility. Each failed rally attempt after hitting new highs damages bitcoin’s reputation as a reliable store of value. Investors notice when an asset hits records, then immediately sells off.
Bitcoin now sits at $118,800, down 2% over 24 hours and 6% from Monday’s peak. Bulls got stifled again. The question is whether this becomes a deeper correction or just another brief dip before the next attempt higher.
For now, the market’s message is clear: trade war fears trump all-time highs. And gold, not bitcoin, remains the asset investors trust when uncertainty strikes.