Tariff Fears Trigger a 25% Drop in XRP and Dogecoin, Contributing to $2.2B in Crypto Liquidations.

XRP, Dogecoin (DOGE), and Cardano (ADA) all experienced significant losses, falling more than 25% and erasing all gains made since December. This downturn has brought their prices back to pre-U.S. election levels from early November. The sharp drop comes after the United States imposed new tariffs on Canada and Mexico over the weekend, which raised concerns about a potential global trade war, dampening investor sentiment toward risk assets.

In the past 24 hours, major cryptocurrencies have seen steep declines, with XRP, DOGE, and ADA falling by over 25%. Bitcoin (BTC) also saw a 6% drop, while the overall market capitalization plummeted by 12%, marking the largest fall in over a year. The CoinDesk 20 Index (CD20), which tracks the largest digital assets, lost 10%. The renewed fears surrounding the trade war are stoking uncertainty, with traders seeking safer assets.

In the futures market, Ethereum (ETH)-related products suffered over $600 million in liquidations, particularly during early Asian trading hours. XRP and DOGE futures alone accounted for $150 million in liquidations, while altcoins experienced a total of $138 million in losses. Altogether, liquidations across the crypto market surpassed $2.2 billion, marking the highest level of liquidations this year and one of the largest liquidation events in the past 12 months. The largest liquidation occurred on Binance, with a $25 million ETH tether-margined position being closed.

“Ethereum’s sharp 20% drop shocked the market, and we saw significant liquidation activity across various altcoins,” said Augustine Fan, head of insights at SignalPlus. “With over $2 billion in liquidations, the market appears to be in a risk-off phase as we await further developments in the U.S. equity markets.”

Market liquidations occur when traders with leveraged positions don’t have enough funds to maintain their positions, leading to automatic closures. While common in crypto, these large-scale liquidations signal a major shift in sentiment, with the possibility of more downside to come.

This market correction is largely attributed to the renewed trade tensions between the U.S. and its key trading partners. President Donald Trump’s decision to impose 25% tariffs on Canadian and Mexican imports has created uncertainty about the economic outlook. Both countries have threatened to retaliate, while China has indicated it will take the issue to the World Trade Organization (WTO). The concern is that the tariffs could raise the costs of goods, lead to economic disruptions, and slow global growth, which has sent shockwaves through markets.