The recent sudden crash in Bitcoin’s price is closely linked to escalating tensions between the United States and China, particularly involving trade disputes and export controls. On October 10, 2025, Bitcoin experienced a dramatic flash crash, losing over 10% of its value in minutes, triggered by a sharp escalation in the US-China trade war. This event was sparked by China announcing aggressive export controls on rare-earth minerals, which are critical for many high-tech industries, including defense, semiconductors, and artificial intelligence. In response, then-President Donald Trump declared a 100% tariff on Chinese goods and new export controls on critical software, intensifying fears of a global supply chain shock[1][3].
This geopolitical conflict directly impacted global markets, with traditional equities like the S&P 500 and Nasdaq also falling significantly. However, the cryptocurrency market, and Bitcoin in particular, absorbed the shock more intensely and rapidly. The timing of Trump’s announcement, made after traditional markets had closed, meant that crypto markets, which operate 24/7, were the first to react violently. Bitcoin’s price plunged from around $117,000 to below $108,000 within hours, with some moments seeing a 10% drop. Other cryptocurrencies suffered even steeper losses, with some falling 20-40%[1][3].
The crash was exacerbated by the liquidation of approximately $19 billion in leveraged positions, which are trades made with borrowed funds that amplify gains and losses. When prices fall sharply, these positions are forcibly closed, causing a cascade of selling that further drives down prices. This deleveraging effect contributed to the rapid and severe price decline. Additionally, technical glitches on crypto trading platforms during the panic amplified losses and trader frustration[3].
Beyond the immediate trade war trigger, several other factors contributed to the Bitcoin price slump. Analysts point to ongoing macroeconomic uncertainties, including concerns about the US government’s potential shutdown, the Federal Reserve’s upcoming decisions on interest rates, and the lingering effects of a previous market crash on October 10. This earlier crash had already shaken investor confidence and drained liquidity from the market, making it more vulnerable to new shocks[2].
The US-China trade war has been simmering for years, but the recent escalation involving rare-earth minerals is particularly significant because China controls a large share of these critical resources. Rare-earth elements are essential for manufacturing many high-tech products, and China’s tightened export controls signal a strategic move to leverage this dominance. The US response with tariffs and export controls on software reflects a tit-for-tat escalation that has unsettled global markets and heightened fears of a prolonged conflict[1].
In summary, China is a key factor behind the sudden Bitcoin price crash, but it is not the sole cause. The crash was triggered by China’s aggressive export restrictions, which led to a harsh US response, creating a geopolitical shock that rippled through global financial markets. The cryptocurrency market’s inherent volatility, high leverage, and 24/7 trading amplified the impact. Other macroeconomic uncertainties and prior market instability also played significant roles in the price decline. This event highlights how intertwined global politics and economics have become with the cryptocurrency market, making it highly sensitive to geopolitical developments[1][2][3].