Yesterday, the stock market and crypto experienced an extremely sharp and unexpected drop across all indices following the news that President Trump would impose a 100% tariff on China. The news sparked fear in the market, leading to a massive liquidation of crypto leveraged positions.

Market Overview: Stock & Crypto Plunge

US equities fell sharply and unexpectedly across all three indices on Friday (September 10th, US) following the tariff news from President Trump. The Dow Jones dropped 1.9%, the S&P 500 fell 2.71%, and the Nasdaq plummeted the most at 3.56%. Oil prices also fell to $58.8 per barrel, while gold continued to rise to $4027 per ounce, highlighting its role as a safe haven.

From the Fed, Governor Christopher Waller suggested that rate cuts should begin but with caution. Despite a weakening job market, GDP growth remains strong, and inflation is still above the 2% target. He supports a plan for two more small rate cuts this year and believes the impact of Trump's tariffs on inflation will only be temporary.

Bitcoin saw a sharp and rapid decline to $105,000 before recovering to around $112,000. Most altcoins saw significant drops of 40%–50% before also recovering partially as the BTC price rebounded. The overall crypto market capitalization fell to $3.83 trillion.

US BTC spot ETFs saw minor outflows of $4.5 million amidst the market volatility on Friday. Similarly, ETH spot ETFs had $174.9 million in outflows. Conversely, the SOL ETF saw a $5.6 million inflow.

The Liquidation Cascade: Over $19 Billion Wiped Out

When the BTC price plummeted rapidly, $511 million in long positions were liquidated within just 60 minutes. Over the course of 24 hours, more than $19 billion in leveraged positions were liquidated, with over $16 billion being long bets. This is an extremely large and rarely seen number, indicating a massive "long squeeze."

Trump's Tariff Threat and China's "Hostile" Actions

President Trump posted a long message on Truth Social yesterday, warning about China's "hostile" attitude and threatening high tariffs. President Trump stated that China has suddenly become hostile, sending official letters to many countries globally announcing plans to impose export controls on rare earth minerals and many other manufacturing inputs, including items not even produced in China.

He warned that this move could disrupt global markets, making it difficult for countries to access critical materials, and called it an unprecedented act of hostile trade. According to President Trump, many countries have contacted the US to express anger and concern over China's action, especially since bilateral relations had recently been quite positive. He believes this shows China has been secretly preparing for a long time, leveraging its control over rare earth elements as a tool to pressure the world. President Trump added that the US also holds strong monopolistic positions in many areas but has never used them. He warned that if China continues, the US will retaliate financially, including imposing new large-scale tariffs on Chinese goods along with other trade measures. He also noted that this action occurred on the same day that the Middle East was moving towards peace, suggesting China's timing was deliberately provocative. He concluded that while this trade confrontation may cause temporary difficulties, it will be beneficial for the US in the long run, helping the country gain more self-sufficiency and reduce its reliance on China.

Wall Street's Shift: JPM's Forecast & Morgan Stanley's Adoption

JPMorgan now estimates that if the Solana ETF is approved for trading, it could attract about $1 billion in capital in its first year, equivalent to about one-seventh of the capital that flowed into Ethereum ETFs. The bank argues that unlike Bitcoin and Ethereum, which are pioneering and easily understood assets, Solana and other new ETFs may dilute capital flows due to too many options. JPMorgan, a former crypto opponent, has now changed its view and is issuing a more positive forecast for the digital asset market.

Concurrently, another major bank is easing restrictions on providing crypto buying services to clients now that it sees the benefits that crypto offers. Starting October 15th, Morgan Stanley will open up crypto investment access to all clients, including retirement accounts, rather than limiting it only to ultra-high-net-worth individuals as before. The bank recommends allocating up to 4% of a portfolio to digital assets. Currently, it only allows investment in Bitcoin ETFs from BlackRock and Fidelity but may soon expand to Ethereum and Solana. Morgan Stanley manages $8.2 trillion in assets.

Following this, major banks including Bank of America, Goldman Sachs, Deutsche Bank, BNP Paribas, Santander, Barclays, TD Bank, MUFG, and UBS are jointly developing a shared strategy related to stablecoins, though details have not been released. Concurrently, Coinbase and Mastercard are reportedly in talks to acquire BVNK, a London-based stablecoin company, for about $2 billion. BVNK, founded in 2021, specializes in providing stablecoin payment infrastructure, cross-border transfers, and global treasury management.

Europe is also promoting the development of euro-pegged stablecoins to reduce reliance on dollar stablecoins and is encouraging domestic institutions to issue them. However, this process is slow due to complex legislative procedures.

Other Key Crypto & Market Updates

Canary and Bitwise have filed their sixth ETF amendments, setting the management fee at 0.5% and allowing staking, suggesting the approval process is nearing completion. Solana and Litecoin ETFs may be approved soon. The Solana ETF by Rosy operates under different regulations than traditional ETFs like BlackRock or Fidelity, with a management fee of 0.75% and including futures contracts, spot Solana, and cash, rather than holding pure Solana like standard ETFs.

The list of candidates for Fed Chair being reviewed by President Trump has been narrowed down to 5 people: Michelle Bowman, Christopher Waller, Kevin Hassett, Kevin Warsh, and Rick Rieder. Treasury Secretary Scott Bessent will conduct a second round of interviews and submit the final list to the President after Thanksgiving. The selected candidate may be appointed as a Fed Governor before succeeding Jerome Powell, whose term ends in May.

BitMine Immersion just purchased an additional 23,823 ETH worth approximately $103.7 million, raising its total holdings to 2.83 million ETH ($12.4 billion), making it the largest Ethereum holder among institutions globally and the second-largest crypto treasury after Michael Saylor's company. The company has a long-term goal of accumulating 5% of the total ETH supply to solidify its position and support the ecosystem.

Phala Network, an AI project in the Polkadot ecosystem, will fully transition to the Ethereum Layer 2 to develop secure computation services for AI and GPU use. The PHA token will be swapped to an ERC-20 token at a 1:1 ratio, maintaining staking and governance. Phala aims to consolidate all operations on Ethereum, unlike other Polkadot projects that only partially expand.

The US will buy $20 billion worth of Argentine pesos and establish a $20 billion currency swap to help Argentina overcome its liquidity crisis. Washington confirmed its support for President Milei's economic reforms, viewing Argentina's recovery as a strategic priority. A meeting between Milei and Trump is expected on October 14th.

Sources

• Truth Social (President Trump)
• Bloomberg
• CoinDesk
• U.S. Treasury
• TradingView
• Reuters
• SEC
• J.P. Morgan Chase Research
• Morgan Stanley Official Announcements
• BitMine Immersion Technologies Investor Relations
• Phala Network Official Announcements

Disclaimer

This article is for informational purposes only and should not be considered financial advice. Please do your own research before making investment decisions.