Bitcoin and broader crypto markets claw back $250B in value as Trump signals softer stance on China.

After suffering one of the most severe selloffs in its history, the cryptocurrency market staged a dramatic comeback on Monday, propelled by renewed optimism around U.S.-China trade relations.

The total market capitalization of digital assets surged more than 6% to reclaim the $4 trillion mark, according to data from CoinGecko, as Bitcoin rebounded to around $115,000 in early London trading. Ethereum followed suit, bouncing back to $4,100 after dipping below $3,500 over the weekend.

This rebound followed conciliatory comments on Sunday from President Donald Trump and Vice President JD Vance, who signaled openness to a trade deal with China—calming investor nerves after Friday’s announcement of sweeping new tariffs had sparked a wave of risk aversion.

A Historic Selloff

Just days prior, the crypto sector experienced a brutal shakeout:

• A record $19 billion in leveraged crypto bets was wiped out.
  
• Bitcoin briefly fell below $105,000, triggering mass liquidations.
  
• 1.6 million traders were liquidated, according to Coinglass.
  
• The third-largest stablecoin, Ethena USDe, lost its dollar peg.
  
• Even Binance, the world’s largest crypto exchange, faced technical outages.

The selloff appeared to be a cascade of leverage-fueled declines, compounded by thin weekend liquidity and algorithmic selling. Analysts at Coinglass called it “one of the most severe leverage resets in crypto history.”

Market Mechanics Reset

In a research note, crypto market maker Caladan reported that open interest in Bitcoin and Ether options halved to $33B and $19B, respectively. While painful in the short term, analysts say this could restore healthier market structure and more sustainable price discovery going forward.

Meanwhile, funding rates—a key indicator of market sentiment and leverage costs—have dropped to their lowest levels since the FTX collapse in 2022, signaling a dramatic unwind in bullish positions.

Still Up for the Year

Despite the weekend turmoil, Bitcoin remains up 23% year-to-date, buoyed in part by Trump’s pro-crypto policy stance and broader adoption tailwinds.

Just last week, Bitcoin had touched an all-time high of $126,251 on October 6, making the weekend crash all the more jarring for overleveraged market participants.

As of Monday, no single entity has yet been identified as the primary victim of the losses — easing fears of systemic contagion, for now.

What’s Next?

While the market has found temporary relief, analysts warn that headline-driven volatility will continue to dominate the crypto landscape in the near term. With trade policy, regulation, and global macro risks in flux, investors are advised to remain cautious and avoid excessive leverage.

Still, the swift rebound underscores the resilience of the asset class — and its growing interdependence with broader geopolitical and economic narratives.