Crypto Retail Traders Link Market Drop to Trump’s 100% Tariff on China, Analysts Cite Deeper Issues

• Traders blamed Trump’s China tariffs as crypto markets plunged sharply.
• Analysts linked crash to excessive leverage beyond tariff-driven panic.
• Bitcoin’s drop deepened fear, pushing sentiment to a six-month low.

Retail traders in the crypto market were quick to associate Friday’s market slump with President Donald Trump’s announcement of a 100% tariff on Chinese goods. According to Santiment, this reaction reflected a common tendency among retail investors to seek a single event to justify sharp declines in the market.

Santiment noted that social media discussions about the U.S.–China tariffs surged immediately after the crash, showing how retail traders quickly united around the tariff narrative. The analytics firm described this as “rationalization behavior,” emphasizing that such reactions often overlook underlying market weaknesses.

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Analysts Highlight Leverage and Risk as Key Factors

Analysts from The Kobeissi Letter argued that the downturn went beyond geopolitical tensions. They pointed to the excessive leverage in the crypto market, noting that nearly $16.7 billion in long positions were liquidated compared to only $2.5 billion in short positions. This imbalance revealed an overwhelming long bias that magnified the crash’s impact.

Bitcoin experienced a sharp decline of more than 10% within 24 hours, briefly falling to $102,000 on Binance after Trump’s announcement. At the time of reporting, Bitcoin traded at $109,910, marking a 10.06% weekly drop.

Santiment emphasized that developments between the United States and China will remain crucial in influencing retail traders’ decisions in the near term. If discussions between Trump and Chinese President Xi Jinping bring positive outcomes, sentiment could rebound. However, further tensions may fuel pessimistic forecasts, including projections of Bitcoin falling below $100,000.

Market sentiment deteriorated sharply following the drop, with the Crypto Fear & Greed Index falling from a “Greed” level of 64 to “Fear” at 27. This 37-point decline represented the lowest sentiment level in nearly six months.

Outlook on Retail Confidence

Santiment suggested that Bitcoin continues to behave more like a risk asset than a safe haven during geopolitical stress. Consequently, retail traders remain highly sensitive to global developments, particularly those involving the U.S. and China.

The recent correction served as a reminder that external events often amplify existing vulnerabilities in the leveraged crypto market.

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