Bitcoin mounted a swift recovery Thursday, surging back above $106,000 after President Donald Trump signaled a dramatic reversal on his threat to impose 100% tariffs on Chinese imports, providing relief to crypto markets still reeling from last week's historic crash.
When asked directly whether the controversial tariffs would proceed as planned for November 1, Trump responded with a simple "No," adding that "I think we will be fine with China," according to reports. The presidents of both countries are expected to meet within two weeks to discuss the escalating trade tensions.
Bitcoin's price reacted instantaneously to the news, climbing from its multi-month low below $104,000 to over $106,000 within minutes of Trump's comments - a sharp reversal that underscores just how sensitive digital assets have become to geopolitical developments.
The $19 Billion Liquidation That Shook Crypto
The rapid price movement Thursday stands in stark contrast to last Friday's bloodbath, when Trump's initial tariff announcement triggered what CoinGlass called "the largest liquidation event in crypto history."
On October 10, Trump posted on Truth Social that China had taken an "extraordinarily aggressive position on Trade" by announcing sweeping export controls on rare earth minerals. In retaliation, he declared the United States would impose a 100% tariff on Chinese goods starting November 1, along with export controls on "any and all critical software."
The market reaction was immediate and brutal. Bitcoin, which had been trading above $122,000, plummeted below $117,000 within minutes. The cascading effect of overleveraged positions drove the flagship cryptocurrency even lower - crashing to under $110,000 on most exchanges and touching $101,000-$102,000 on Binance.
According to data from CoinGlass, the violent selloff erased over $19 billion in leveraged positions within 24 hours - nearly 20 times larger than the liquidations during the March 2020 COVID-19 crash and dwarfing the $1.6 billion lost during the November 2022 FTX collapse.
The broader cryptocurrency market wasn't spared. Ethereum plunged 21% at its lowest point, Solana dropped over 14%, and highly speculative assets like Dogecoin tumbled more than 50%. President Trump's own $TRUMP meme coin crashed 63% during the panic.
A Crisis Born From Miscommunication?
The severity of the market reaction raised questions about whether the entire episode stemmed from a diplomatic misunderstanding between Washington and Beijing. China's Ministry of Commerce quickly pushed back on Trump's characterization, clarifying that the rare earth export controls were "lawful national-security steps - not blanket bans."
The ministry said licenses would be issued for eligible civilian trade and that supply-chain disruptions would be "very limited." While urging a return to consultation channels, Chinese officials warned they would take "resolute measures" if the United States escalated further.
The exchange of heated rhetoric gave way to hints of reconciliation over the weekend, with both sides signaling willingness to negotiate. Trump's Thursday comments represent the clearest indication yet that the trade tensions may have been overblown.
Markets Remain Fragile Despite Recovery
While Bitcoin's bounce above $106,000 offers hope for bulls, the cryptocurrency remains far below its October 6 record high above $126,000. The entire digital asset market capitalization remains suppressed, trading around $3.78 trillion - down from over $4.25 trillion before the Friday crash.
The Crypto Fear & Greed Index registered "Extreme Fear" at 24 as of Sunday, a dramatic shift from "Greed" just one week earlier. Over 1.6 million trading accounts were liquidated during the Friday selloff, leaving the market with significantly reduced leverage and open interest.
Traditional markets have also struggled to recover. The S&P 500 posted its worst single day since April on Friday, falling 2.7%, while the Nasdaq Composite dropped 3.56%. Crypto-related stocks including Coinbase, Robinhood, and Circle declined 5-6%.
What This Means for Crypto's Future
The episode has exposed cryptocurrency's vulnerability to macroeconomic shocks and geopolitical tensions, challenging the narrative that Bitcoin serves as a reliable hedge against traditional market turbulence. When Trump announced the tariffs, investors fled to traditional safe havens like gold and silver - both hitting record highs - rather than digital assets.
"The days of Bitcoin existing in its own financial bubble are over," Liam Parker, chief economist at ChainSight Analytics, told Finance Monthly. "Institutional adoption brought legitimacy—but also exposure to the same macro volatility that moves everything else."
Despite the turbulence, some analysts view the massive liquidation event as a necessary reset. "Friday's liquidation wasn't a crypto collapse," Parker noted. "It was a reset. Smart money is already buying the dip."
The structural forces supporting Bitcoin remain intact: U.S.-listed Bitcoin ETFs continue to see steady inflows, institutional investors like BlackRock and Fidelity have been accumulating during price weakness, and regulatory clarity has improved under the Trump administration. The president recently issued an executive order allowing digital assets in 401(k) retirement plans, which had helped propel Bitcoin to its all-time high just days before the tariff announcement.
Critical Technical Levels Ahead
Technical analysts are closely watching whether Bitcoin can hold above $106,000 as a new support level. A failure to maintain this price could see the cryptocurrency test $100,000 again, while a sustained move above $120,000 would signal renewed bullish momentum.
The upcoming meeting between Trump and Chinese President Xi Jinping will be crucial for market sentiment. Any concrete progress toward resolving trade tensions could provide the catalyst for a broader recovery. However, another escalation - or unexpected geopolitical shock - could quickly erase recent gains and retest the lows.
For now, crypto traders are learning a harsh lesson about the interconnected nature of modern financial markets. In 2025, a single presidential social media post can trigger the largest liquidation event in cryptocurrency history, while a brief comment to reporters can instantly add billions back to the market.
As volatility remains elevated and geopolitical uncertainty persists, the coming weeks will test whether Bitcoin's recent weakness represents a temporary correction or the beginning of a more prolonged downturn.