The global cryptocurrency market plunged by more than $150 billion in market capitalisation over the past 24 hours, driven by heightened trade frictions between the United States and China, according to data from CoinGecko. The downturn followed a massive wave of liquidations totalling around $19 billion in leveraged positions, the largest single-day purge on record, which ignited a cascade selloff starting October 10. Investors fled risk assets amid fears of broader economic fallout, with cryptocurrencies mirroring declines in Asian and European equities as markets opened lower on Tuesday.

The escalation stemmed from U.S. President Donald Trump's threats of steeper tariffs on Chinese imports in retaliation for Beijing's tightened export controls on critical technologies. China responded swiftly by restricting U.S. operations of South Korea's Hanwha Ocean Co., a key shipbuilder, targeting American interests in the shipping industry—a sector already strained by global supply chain disruptions. This tit-for-tat exchange has amplified concerns over a potential trade war redux, reminiscent of the 2018-2019 standoff that shaved trillions from global markets. While digital assets briefly rallied on Monday to claw back some losses, the reprieve proved short-lived, with most tokens resuming their slide as sentiment soured further.

Major cryptocurrencies bore the brunt of the volatility. Bitcoin, the sector's bellwether, dropped as much as 4% to approximately $111,200 in early London trading, marking a retreat from its recent highs above $115,000. Ethereum fared worse, tumbling 7.8% to under $4,000, while smaller altcoins like Solana and Dogecoin shed 10-15% amid heightened leverage unwinds. The purge extended to institutional products, with $756 million in outflows from U.S. Bitcoin and Ether exchange-traded funds on Monday alone—the highest in months. Publicly listed firms with crypto exposure, such as Japan's Metaplanet Inc., saw their shares crater 12% to a five-month low, pushing the company's enterprise value below its Bitcoin holdings for the first time.

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Analysts warn of prolonged uncertainty, with the market potentially entering a consolidation phase marked by caution and selective positioning. Timothy Misir, head of research at BRN, cautioned that a Bitcoin breach below $110,000 could test support levels between $104,000 and $108,000, where liquidity pools might absorb further selling. Glassnode, a leading on-chain analytics firm, described the environment as one of "renewed caution and measured rebuilding of confidence" across spot and derivatives trading. As U.S. markets reopen amid these headwinds, the crypto sector's correlation with macroeconomic risks remains stark, underscoring its vulnerability to geopolitical shocks despite maturing infrastructure. Regulators and investors alike are bracing for a period of stabilisation before any sustained recovery.

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