Firi Weekly: Another Trade War?

Trump Threatens 100% China Tariffs:
- U.S. President Trump announces 100% tariffs on Chinese goods starting November 1, escalating trade tensions and triggering massive market volatility across stocks and crypto markets.
Historic Over $19.3 Billion Crypto Liquidation:
- These tariff fears triggered the largest crypto liquidation on record on Friday, with XRP down by as much as 35% and Solana down 20% as leveraged trades unwound rapidly.
Before Reversing Course on Trade War:
- President Trump backtracked on Sunday, saying “everything will be fine” with China, calming markets after the weekend drama and leading to a partial crypto price recovery.
Bitcoin ETFs See $1.21 Billion Inflow:
- U.S. Bitcoin spot ETFs recorded their second-highest daily net inflow since their January 2024 launch, though the inflows came before the weekend volatility.

Last Week’s Big Three

Markets Brace for Renewed Trade Tensions: Friday afternoon delivered an unwelcome surprise to markets when U.S. President Donald Trump took to social media, declaring he saw no reason to proceed with his scheduled meeting with Chinese President Xi Jinping in two weeks. Trump also threatened substantial tariff increases on Chinese goods, with an additional 100%, citing China's newly implemented export controls on rare-earth minerals—critical components in electronics and defense systems—as a hostile act. This development comes as the world's two largest economies have yet to reach a comprehensive trade agreement following Trump's broader trade offensive initiated earlier this year.

Trump's initial salvo immediately evoked painful memories of earlier this year's tariff announcements, when protectionist rhetoric sent markets reeling on fears of dampened growth and accelerating inflation. The news triggered swift sell-offs in both equities and digital assets as investors weighed the implications.

From Threat to Reality: The situation deteriorated further Friday evening when Trump posted again on social media, announcing the United States would impose 100% tariffs on all Chinese goods imported after November 1—or potentially sooner, depending on China's response. These tariffs would be layered on top of the existing 30% duties already affecting most Chinese imports. Trump simultaneously threatened comprehensive export controls on all critical software destined for China, effective the same date. Beijing swiftly condemned the U.S. for what it characterized as double standards and warned of retaliatory measures should Washington proceed with the threatened tariffs.

While Trump’s first post rattled markets, his second—with specific percentages and implementation dates—turned abstract threats into concrete, imminent risks. As the graph below illustrates, it was not positive for the crypto market.

Markets Exhale Because "Everything Will Be Fine": Following a weekend dominated by tariff anxieties, Trump appeared to de-escalate tensions Sunday evening with another social media post, urging calm and stating that "everything will be fine" with China. He suggested President Xi had simply experienced "a bad moment" and emphasized that neither leader wanted to precipitate an economic depression in China.

Markets interpreted this pivot as a significant de-escalation. Cryptocurrency prices, among the few markets trading over the weekend, surged on the news. The critical question now becomes how this situation evolves—though one certainty remains: extreme volatility remains just one presidential social media post away.

Behind the Charts

Chart 1: Top 5 Cryptocurrencies Last Week Price Performance

Friday's dual social media salvos from President Trump triggered the cryptocurrency market's most severe liquidation event on record, with at least $19.3 billion in positions forcibly closed. As more leveraged positions were sold off, this triggered additional selling pressure that pushed prices down even further. This self-reinforcing dynamic hit smaller-cap cryptocurrencies particularly hard, as forced liquidations flooded the market with additional selling pressure.

The carnage was remarkable in its speed and severity. XRP crashed more than 35% in under seven hours, while Solana plunged over 20% during the same period. Following Trump's second post announcing the 100% tariff deadline, XRP collapsed 34% and Solana dropped 14% within just 30 minutes before both staged partial recoveries. Other altcoins experienced even more severe drawdowns before recovering alongside the broader market after Trump's Sunday reassurance via social media.

Chart 2: Bitcoin and Ethereum Futures’ Open Interest

Bitcoin and Ethereum, the market's two largest cryptocurrencies, weathered the storm better than their smaller counterparts, though both still sustained significant damage. The deleveraging was clearly visible in futures markets, with Bitcoin open interest plummeting by more than $11 billion and Ethereum's decreasing by over $9 billion before recovering as digital assets stabilized. This dramatic contraction in open interest underscores the exceptional magnitude of Friday's market dislocation.

Chart 3: The S&P 500 Index and Gold Price Performance

The turmoil extended well beyond cryptocurrencies. The S&P 500 Index, the benchmark for U.S. equities, declined 2.71% on Friday alone, while the technology-heavy NASDAQ 100 Index dropped 3.49%.

Gold, meanwhile, achieved a historic milestone last week, breaching the $4,000 per ounce level for the first time. Notably, the precious metal demonstrated its safe-haven credentials during Friday's upheaval, actually gaining ground as investors sought refuge from the uncertainty—displaying far less volatility than risk assets.

A Number to Remember

$1,354

Before the tariff-induced selloff engulfed markets, BNB achieved a new all-time high of $1,354 on Tuesday, simultaneously overtaking XRP to claim the third spot among cryptocurrencies by market capitalization.

On Our Radar

Key developments we are monitoring:

U.S.-China Trade Negotiations: The evolution of trade discussions between Washington and Beijing will dominate market attention in the near term following this weekend's dramatic developments. Any concrete steps toward either escalation or de-escalation will likely drive significant market moves.
Trump's Social Media Strategy: While formal trade negotiations represent one variable, President Trump's public communications present another entirely. As this weekend demonstrated—and as we have witnessed repeatedly—a single social media post can instantly upend market dynamics. Markets remain hypersensitive to any signals of renewed trade war escalation.
ETF Flow Momentum: U.S. Bitcoin spot ETFs recorded their second-highest daily net inflow of $1.21 billion on Monday, followed by another strong $875.61 million on Tuesday. We are watching whether this buying continues this week despite the weekend's uncertainty—potentially signaling that investors are looking through the near-term volatility.

Mads Eberhardt13/10/2025

Should not be considered financial advice. Crypto may involve high risk.