Original title: "Bitcoin's epic plunge, 700,000 people liquidated, surpassing 312"
On February 3, according to CNBC, cryptocurrencies experienced a safe-haven trend on Sunday, plummeting sharply after US President Donald Trump imposed long-threatened import tariffs on Canada, Mexico and China.
According to Coin Metrics data, the latest plunge was 7% to $93,768.66. The CoinDesk 20 index, which measures the 20 largest digital assets by market value, fell 19%. Ethereum plunged 25% to its lowest level since November.
According to Coinglass data, the total liquidation of the entire network in the past 24 hours was $2.119 billion, of which $1.78 billion was liquidated on long orders and $270 million was liquidated on short orders. A total of 718,513 people were liquidated worldwide. The largest single liquidation occurred on Binance-ETHBTC, with a value of $25.635 million.
On March 12, 2020, the crypto market experienced a short-term rapid plunge. At that time, more than 100,000 people were liquidated. According to Coin data, on March 12, within just 24 hours, more than 100,000 people were liquidated on the entire network. The largest single liquidation occurred on Huobi, with BTC worth about 58.32 million US dollars, and the total amount of liquidation on the entire network was 2.93 billion US dollars.
The decline in U.S. goods came after Trump signed an order imposing a 25% tariff on Mexican and Canadian imports and a 10% tariff on China, which will take effect on Tuesday, according to CNBC. U.S. trade with the three countries is about $1.6 trillion.
Jim Bianco, founder of Bianco Research, said that many people are asking why BTC fell so much because of the tariff news. Because BTC is a speculative asset. It is 2x QQQ (if not, it is 3x). After the stock opened, the S&P futures opened down 117 points, a drop of 1.9%. Remember last Monday, Deepseek also caused the S&P index to fall 100 points, a drop of 1.5%, and NDX futures opened down 600 points, a drop of 2.95%.
Jeff Park, head of alpha strategies at Bitwise Asset Management, said an ongoing tariff war would be “terrific” for Bitcoin in the long run as the dollar and U.S. interest rates would eventually weaken.
In Jeff Park's view, to understand the current tariff issue, we must consider two backgrounds: one is the curse of Triffin's dilemma; the other is Trump's personal goals. By analyzing these two backgrounds, the final result becomes clear: tariffs may only be a temporary measure, but the final conclusion is that Bitcoin will not only go higher, but also go faster.
First, the Triffin Dilemma: The dollar’s status as a reserve currency gives the US “exorbitant privileges” in financial transactions/trade, which has a few effects: 1) the dollar is structurally overvalued because other countries need to hold dollars as reserves in an inelastic way; 2) the US must continue to run trade deficits in order to provide these dollars to the world; 3) the US government can therefore continue to borrow at a lower rate than it should. The US wants to keep point 3 but get rid of points 1 and 2 - but how? The answer is tariffs.
Recognize that tariffs are often temporary negotiating tools to achieve objectives. The ultimate goal is to seek a multilateral agreement to weaken the dollar, essentially a Plaza Accord 2.0. A hypothetical scenario is that the United States explicitly states that countries must reduce their dollar reserves while requiring them to further extend the duration of their holdings of US Treasuries. In other words, Trump is trying to find a "YCC, not YCC" strategy within the executive branch. Bessant no doubt agrees with this because he realizes that Yellen has left him a bag of garbage. Yellen's legacy is to almost permanently impair the Treasury's ability to manage duration by doubling the debt financing ratio (adding false liquidity), leaving the United States at the mercy of refinancing when interest rates start to rise. The cost to the US taxpayer cannot be underestimated.
The US is thus paving the way to the holy grail of fiat money alchemy: lower dollars and lower yields.
This leads to the second point: Having said this before, Trump’s primary goal is to lower the 10-year rate because his own wealth depends on it: real estate. His obsession with Powell cutting short rates, then realizing it wasn’t working, was the catalyst. Never doubt the pure, transparent, profit-driven motives and stand with him. Mark my words: the 10-year rate will go down, no matter what the cost.
Therefore, the asset to hold is Bitcoin. In the context of a weak dollar and low US interest rates, some unreliable economists will tell you that this is impossible (because they cannot simulate national policies), but the prices of US risk assets will soar beyond your imagination, because it is likely that the government will have to cut taxes significantly due to the rising costs that come with losing comparative advantages. The cost of tariffs will most likely be shared by the United States and its trading partners through higher inflation, but the impact on foreigners will be relatively greater. These countries will have to find a way to counter their weak growth problems, stimulating the economy through monetary and fiscal policies, which will eventually lead to currency devaluation. The angry citizens of these countries will experience a small financial crisis and look for alternatives.
Jeff Park concluded by saying that unlike the 1970s when the world was largely offline, today we are not only online, but also on-chain. Therefore, while both sides of the trade imbalance equation need Bitcoin for two different reasons, the final result is the same: higher and faster - because we are at war.
Additionally, investors view $90,000 as a key support level for Bitcoin, with some warning that if the cryptocurrency falls sharply below its support level, the price will fall further to $80,000.
Bitcoin is currently down about 16% from its all-time high of $109,350.72 set on Jan. 20. Over the years, seasoned cryptocurrency investors and traders have become accustomed to pullbacks of about 30% during bull runs.
