Preface

The global market is experiencing heightened volatility as China retaliates against U.S. tariffs. This reaction has significantly impacted the cryptocurrency sector. Key digital assets like Bitcoin, Ethereum, and Dogecoin have encountered steep declines, symptomatic of broader market distress driven by geopolitical tensions and economic uncertainties. As China sanctions U.S. entities, global financial environments continue to react, emphasizing the intersection of politics and market sentiment.

Lazy bag

Bitcoin slipped under $112,000 amidst global tensions, igniting a 6% drop in ETH and DOGE. Crypto remains sensitive to macroeconomic risks.

Main Body

Bitcoin declined below $112,000, occurring during the Tuesday afternoon trading session in Hong Kong, as China’s countermeasures to U.S. tariffs instigated a fresh wave of risk aversion globally. Earlier reports from Bloomberg on Tuesday detailed China's sanctions on U.S. affiliates of the South Korean shipbuilding company, Hanwha Ocean. This development reignited apprehensions regarding the potential escalation of trade disputes with Washington, only days after both parties displayed signs of diplomatic restraint.

The repercussions were stark across Asian markets. Japanese indices, prominently the Nikkei, plummeted more than 3%—its steepest fall in almost two months. A ripple effect ensued across U.S. and European equity futures, necessitating crypto traders to minimize risks after a transient weekend recovery. Contracts linked to the S&P 500 dropped by 0.7%, with Nasdaq 100 futures falling 1%. The Japanese yen, contrary to earlier losses, appreciated against the dollar.

In similar downturns, precious metals like gold and silver reversed early gains, influenced by heavy afternoon trading, while yields on 10-year Treasuries reduced to around 4.03%, reflecting a shift by investors towards safe assets. Cryptocurrencies mirrored these movements, underscoring their vulnerability to macroeconomic uncertainty. Bitcoin retracted by 3% to $111,869, Ethereum crashed 4% to approximately $4,000, and BNB decreased over 10% following earlier outperformance. XRP, Solana, and Dogecoin depreciated between 5% and 6% within a 24-hour span.

Total crypto market liquidations reached $630 million; CoinGlass reports two-thirds of those were long positions. The pronounced volatility comes in the wake of U.S. President Donald Trump’s tariff threats on Chinese imports, which precipitated the largest crypto liquidation episode historically—nearly $20 billion expunged across derivatives markets within one day, as per Hyperliquid's data, briefly followed by a weekend resurgence.

Current trends illustrate cryptocurrency’s entanglement with global macroeconomic dynamics, with successive rebounds briefly overturning Sunday's gains. Yet combined spot and derivatives volume reported by centralized exchanges surged by 7.58% to $9.72 trillion in August, with Gate exchange registering an impressive 98.9% rise to $746 billion, outstripping Bitget to rank as the fourth-largest platform.

Open interest metrics across centralized derivatives exchanges increased by 4.92% to $187 billion. Concurrently, BlackRock’s IBIT fund recorded inflows of $134 million over two consecutive trading days, sustaining a trend of positive net inflows over ten days. Despite Bitcoin’s waning appeal during U.S. trading hours this month—registering a drop from over 10% to 1.7%—it still surpasses performance metrics in European and Asian trading sessions in the previous month.

Key Insights Table