Retail crypto traders were quick to attribute Friday’s sharp market downturn to US President Donald Trump’s announcement of a 100% tariff on Chinese imports, according to data from Santiment. However, analysts caution that the decline stems from a more complex mix of factors beyond the tariff news alone.
Santiment characterized the retail reaction as typical “rationalization” behavior, where investors seek a single identifiable cause for dramatic losses. “After the selloff, the crowd hastened to agree on what might have triggered the rapid drop,” Santiment noted in a Saturday report, highlighting the surge in social media conversations linking the crypto market’s decline to US-China trade tensions.
While geopolitical developments between the US and China have undeniably contributed to market uncertainty, experts from The Kobeissi Letter emphasized that the downturn was exacerbated by excessive leverage in the crypto ecosystem. Their analysis showed a marked long bias, with approximately $16.7 billion in long positions liquidated against $2.5 billion in short positions—a nearly sevenfold difference.
This liquidations cascade unfolded as Bitcoin (BTC) plunged over 10% within a 24-hour span. The BTC/USDT futures pair on Binance briefly dipped to around $102,000 following the tariff announcement before stabilizing. At the time of writing, Bitcoin trades near $109,910, reflecting a 10% decline over the past week, according to CoinMarketCap figures.
Santiment emphasized that US-China relations will remain a significant influence on retail trader sentiment in the near term. Positive developments in diplomatic talks could help improve investor confidence, while escalating tensions may deepen market pessimism. “Expect predictions of Bitcoin falling below the $100,000 threshold to increase if trade disputes worsen,” the report added.
Importantly, Santiment noted a shift in Bitcoin’s behavior, observing that “Bitcoin is acting more like a risk asset than a traditional safe haven during geopolitical strain.”
The market-wide drop also had a stark impact on sentiment metrics. The Crypto Fear & Greed Index, which gauges overall market mood, plunged from 64 (“Greed”) on Friday to 27 (“Fear”) by Saturday — marking its lowest reading in nearly six months.
In summary, while the US tariff announcement has fueled retail traders’ focus on geopolitical risks, the broader market fall reflects a multifaceted issue involving leveraged positions and shifting risk appetites. Stakeholders will closely watch forthcoming US-China developments as a key factor shaping crypto market dynamics.
