The latest escalation in the US-China trade war, marked by President Trump’s new 100% tariffs and software export controls, triggered a ‘risk-off’ sentiment across global markets, causing major cryptocurrencies like Bitcoin and Ethereum to decline sharply.
The global financial landscape was rattled on Friday, October 10, 2025, as US President Donald Trump announced a significant escalation in his ongoing trade conflict with China. This development sent shockwaves through markets worldwide, most notably impacting the volatile world of cryptocurrencies, with Bitcoin and Ethereum experiencing substantial declines.
The Immediate Impact: A Market-Wide Sell-Off
Following President Trump’s announcement, Bitcoin, the world’s largest cryptocurrency by market value, extended its decline. It was last reported down 8.4% at $104,782 as of 17:20 ET (2120 GMT) on October 10, 2025, according to a report from Reuters. This sharp drop mirrored broader market unease, as the benchmark S&P 500 Index also slid by more than 2%.
The downturn wasn’t limited to Bitcoin. Ethereum, the second-largest cryptocurrency, also experienced a significant fall, dropping 5.8% to $3637 at 17:21 ET on the same day. Other reports indicated even steeper declines for both assets, with Bitcoin falling over 8% to $111,000 levels and Ethereum dropping more than 15% to below $3,800 levels, based on real-time data from CoinMarketCap analysis.
Behind the Tariffs: Trump’s Stance and China’s Response
President Trump’s decision to escalate the US-China trade war came as a reprisal to recently announced export limits by China on rare earth minerals. These minerals are crucial for various industries, especially technology and other manufacturing sectors.
In response, Trump declared he was raising tariffs on Chinese exports to the U.S. to 100% and imposing export controls on “any and all critical software.” He articulated his displeasure in a post on Truth Social, describing China’s stance on rare earth minerals as an “extraordinarily aggressive position.”
Trump stated, “it has just been learned that China has taken an extraordinarily aggressive position on trade in sending an extremely hostile letter to the world, stating that they were going to, effective November 1st, 2025, impose large scale export controls on virtually every product they make, and some not even made by them.” He continued, “based on the fact that China has taken this unprecedented position… starting November 1st, 2025 (or sooner…), the United States of America will impose a tariff of 100% on China, over and above any tariff that they are currently paying. Also on November 1st, we will impose export controls on any and all critical software.”
A History of Trade Tensions and Crypto Volatility
This isn’t the first time Trump’s trade policies have sent tremors through financial markets. Similar tariff announcements in the past have consistently impacted global markets and the cryptocurrency space. For instance, in early February 2025, following new import taxes targeting China, Mexico, and Canada, the crypto market experienced a “risk-off” action. Bitcoin fell by over 5% at that time, reaching lows around $91,200, and the overall global crypto market cap dropped nearly 12%.
Earlier in 2024, Bitcoin had rallied to an all-time high of $109,000 in January, fueled by optimism following Trump’s election promises to bolster the asset class. However, concerns of a slowing economy and the ramifications of a potential trade war often weighed down digital asset prices in subsequent months, demonstrating crypto’s sensitivity to macroeconomic pressures.
The “Risk-Off” Sentiment: Why Investors Flee Crypto
The market’s reaction to Trump’s tariff announcement is a classic example of a “risk-off” sentiment. When global economic uncertainty increases, investors tend to move their capital out of perceived risky assets, such as cryptocurrencies and even stocks, and into safer havens. This phenomenon explains why the S&P 500 also saw a decline.
As Thomas Perfumo, global economist at crypto exchange Kraken, observed, “this isn’t an exodus from crypto, but a macro-driven recalibration.” Despite some industry leaders touting Bitcoin as an inflation hedge, financial advisors and retail investors often view it as a risky asset, much like stocks and commodities. This leads to a sell-off as they seek to limit risk in their portfolios during times of geopolitical tension.
This sentiment can also lead to “long-term holder capitulation,” where even long-term investors sell their holdings at lower profits or even a loss, indicating market panic and a bearish trend, as noted by CryptoQuant analysis regarding earlier market dips.
Key Cryptocurrencies Affected
While Bitcoin and Ethereum bore the brunt of the recent sell-off, the impact cascaded across the broader crypto market. Other major tokens experienced significant drops as well:
- XRP was down 22.85% to $2.33, with its market cap down 16.31% to $140.19 billion.
- Binance Coin (BNB) fell 6.6% to $1,094.09, with its market cap down 12.91% to $152.27 billion.
- Tether (USDT), a stablecoin, saw a minor dip of 0.1% to $1, with its market cap down 0.28% to $178.97 billion, reflecting its peg to the US dollar.
- Earlier in the year, Solana also experienced declines, falling around 7% during previous tariff-induced market downturns.
What This Means for the Future of Crypto
The latest events underscore the intricate link between global geopolitics and the cryptocurrency market’s performance. As the US-China trade war continues to evolve, characterized by tit-for-tat tariff increases and export controls, the uncertainty is likely to persist.
Investors must remain aware that while cryptocurrencies offer unique value propositions, they are not immune to macroeconomic pressures. The ongoing debate about Bitcoin’s role as a reliable inflation hedge versus a high-risk asset will only intensify as global economies navigate these turbulent waters. The volatility serves as a stark reminder that digital assets, despite their decentralized nature, are deeply integrated into the broader financial ecosystem and react significantly to major world events.
