Part 6/13:

Leading into the crash, leverage in the crypto markets had reached record heights. Open interest in Bitcoin derivatives alone surged past $94 billion, creating what could be likened to a skyscraper built on fragile foundations. When Trump’s tariff threat hit, it served as the seismic shock that toppled these unstable structures.

Timing and Low Liquidity

The timing of the announcement played a critical role. The move was made on a Friday afternoon—a period marked by traditionally low liquidity as markets around the world close for the weekend. This low liquidity environment amplified the sell-off, with cascading liquidations forcing automated selling through leverage long positions. The result: a vicious downward spiral where stop-loss orders and margin calls triggered further collapse.