Trump's Tariff Threats Cause Stock Market Rollercoaster Again

On Friday night, prices on financial markets fell significantly within a few hours. The trigger was apparently renewed tariffs announced by US President Donald Trump against China, this time at 100 percent. Shares of US giants like Nvidia lost around six percent. The S&P 500 index of the 500 largest publicly traded US companies temporarily declined by almost three percent. Such broad movements are unusual.

Trump's late tariff announcement at 10:50 PM German time did not immediately impact the stock markets, as investors in the US only had a few hours in after-hours trading to sell. This after-hours trading runs until 2 AM German time, after which markets close over the weekend until Monday.

Crypto Market Lost 400 Billion Euros

Such pauses do not exist on cryptocurrency exchanges. Cryptocurrencies showed a strong reaction over the weekend: from Friday afternoon to Sunday, the total market capitalization fell from around 3.6 trillion euros to under 3.2 trillion – a decrease of 12 percent. The largest cryptocurrency, Bitcoin, dropped by more than 15 percent at its peak, and Ethereum by 20 percent.

Smaller cryptocurrencies were sometimes hit even harder. Dogecoin, for example, temporarily landed at a minus of 60 percent, XRP at -30 percent. Price charts do not reflect short-term crashes, as they show the value at the end of the day.

Meanwhile, financial markets have recovered a good deal. The aforementioned S&P 500 index is still down 1.2 percent compared to Friday. Bitcoin is once again approaching the 100,000 euro mark, and Ethereum is exceeding 3500 euros. However, looking at the week-on-week comparison, the situation for many cryptocurrencies still looks bad. Ethereum, for example, is at –10 percent there.

Possible Insider Trading

Only a few selected investors profited significantly from the short crash. Two addresses on Hyperliquid, a decentralized derivatives exchange, made headlines. The timing of the purchases and sales was unusually well chosen, leading to accusations of insider trading. Someone with prior knowledge of the tariff announcement could have profited from it. Insider trading is also prohibited in the US, but often difficult to prove.

The first suspicious address transferred 80 million US dollars on the night from Thursday to Friday. The account bet on falling Bitcoin prices and used short selling for this.

He bought corresponding shorts until 10:49 PM German time, i.e., until one minute before Trump's tariff announcement, and throughout the original threat of "massive tariffs" at 4:57 PM. By midnight, he had made around 88 million dollars in profit. The account has since opened further short positions.

A second address transferred 30 million dollars on Thursday afternoon, betting on falling Ethereum prices. The account made its last short transaction at 9:58 PM German time. It made 72 million dollars in profit. Since August, the account's profit has been over 104 million dollars.

Some observers suspect that the same user could be behind both addresses. Therefore, the profit sum of 192 million dollars, including earlier Ethereum profits since August, is circulating.

(mma)