US Stocks Plummet, Over 420,000 Crypto Traders Liquidated: Trump's Tariff Policy Sparks Market Panic

US Stocks Plummet, Over 420,000 Crypto Traders Liquidated: Trump's Tariff Policy Sparks Market PanicGlobal markets suffered a significant blow on the morning of February 3rd. US stock index futures opened sharply lower, with Dow Jones futures, S&P 500 futures, and Nasdaq 100 futures falling over 1%, 1%, and 2%, respectively

US Stocks Plummet, Over 420,000 Crypto Traders Liquidated: Trump's Tariff Policy Sparks Market Panic

Global markets suffered a significant blow on the morning of February 3rd. US stock index futures opened sharply lower, with Dow Jones futures, S&P 500 futures, and Nasdaq 100 futures falling over 1%, 1%, and 2%, respectively. Simultaneously, the cryptocurrency market experienced a widespread crash, with Bitcoin plunging below $100,000 and over 420,000 traders liquidated in the past 24 hours, resulting in losses exceeding $1 billion. This market turmoil stems from a global panic triggered by US President Trump signing executive orders imposing tariffs of 25% and 10% on imported goods from Canada, Mexico, and China.

US Stock Futures Plunge, Market Sentiment Turns Bearish

The opening of US stock index futures on February 3rd was alarming. At the time of publication, Nasdaq 100 futures were down 2.39%, S&P 500 futures were down 1.89%, and Dow Jones futures were down 1.35%. This opening performance foreshadows a challenging trading day for the US stock market.

The spreading bearish sentiment is closely related to the Federal Reserve's recent monetary policy. On January 29th, the Fed concluded a two-day monetary policy meeting and decided to keep the target range for the federal funds rate unchanged at 4.25%4.5%. This marked the first pause in rate cuts since the Fed began its easing cycle last September. While this was in line with market expectations, it also signaled increased concerns about economic growth prospects.

The CME Group's FedWatch tool shows diverging market expectations regarding the Fed's future monetary policy. The probability of maintaining the interest rate in March is 82.0%, while a 25-basis-point rate cut is only 18.0%. By May, however, the probability of maintaining the rate unchanged drops to 57.5%, while the probability of a cumulative 25-basis-point rate cut rises to 37.1%, and a 50-basis-point rate cut reaches 5.4%.

Wall Street is deeply divided on the Fed's monetary policy trajectory for the year. Goldman Sachs and UBS predict two rate cuts, while Deutsche Bank believes the Fed will not cut rates at all this year. Some investment firms even predict rate hikes. Thanos Papasavvas, founder and CIO of ABP Invest, stated in a column that he anticipates the resilience of the US economy and Trump's policies will push up inflation expectations, forcing Fed Chair Powell to raise rates starting in September. He believes the Fed wrongly judged previous price increases as temporary and now wants to uphold its anti-inflationary credibility.

Cryptocurrency Market Crash, Over 420,000 Liquidations

Meanwhile, the cryptocurrency market suffered an unprecedented blow. In the past 24 hours, Bitcoin fell below $100,000, briefly touching around $96,000. At the time of publication, Bitcoin was trading at $96,603.8, down 3.63%. Other major cryptocurrencies also plummeted, with Ethereum down nearly 10%, SOL down over 6%, XRP down almost 12%, and Dogecoin down over 16%.

CoinGlass data reveals that over 420,000 cryptocurrency traders were liquidated in the past 24 hours, with total liquidations exceeding $1 billion. Caroline Bowler, CEO of BTC Markets, stated, "Trump's tariff war is impacting the entire market. Concerns about trade wars and stagflation are triggering recession fears that are rippling through all cryptocurrencies, including Bitcoin."

International Market Reaction: Canadian Dollar Plummets, EU Expresses Concerns

Beyond US stocks and cryptocurrencies, Trump's tariff policy has significantly impacted other international markets. Non-US currencies generally weakened against the dollar, with the Canadian dollar experiencing a sharp decline against the US dollar. Beata Caranci, Chief Economist and James Orlando, Senior Economist at Toronto-Dominion Bank, stated that there will be a "sharp negative reaction" in North American equity markets and the Canadian dollar.

The European Union expressed regret over the US tariffs imposed on Canada, Mexico, and China. An EU Commission spokesperson stated that tariffs create unnecessary economic disruption and fuel inflation, harming all parties. Open markets and respect for international trade rules are crucial for strong and sustainable economic growth. The EU is committed to fostering growth and economic stability through low tariffs and upholding a robust rules-based trading system. The spokesperson also stated that the EU will "respond firmly" to any trading partner imposing unfair or arbitrary tariffs on EU goods.

Trump has repeatedly threatened to impose tariffs on EU goods exported to the US, recently reiterating that companies not producing goods in the US will face tariffs of "hundreds of billions, even trillions of dollars." These actions have undoubtedly heightened global market tension and fueled concerns about the future economic outlook. Market participants are closely monitoring the situation and attempting to assess the long-term impact of Trump's tariff policy on the global economy. This market plunge is not merely a short-term fluctuation but reflects increased uncertainty and risks facing the global economy. The future market trajectory remains to be seen.