The global financial markets were rocked on July 2 as a surge in risk-off sentiment triggered massive volatility across asset classes. In the crypto space, more than 100,000 traders faced liquidations within 24 hours, with total losses exceeding $260 million. This sharp market correction came on the heels of the U.S. Senate’s passage of a controversial fiscal bill—dubbed the "Big Beautiful" tax and spending plan—sparking concerns over rising national debt, inflationary pressures, and potential economic instability.
Market Volatility Triggers Mass Liquidations
On July 2, cryptocurrency prices swung dramatically. Bitcoin dropped over 1.5% intraday, briefly falling below $105,600 and shedding more than $2,000 in value. Ethereum plunged by more than 3%, while altcoins like Cardano (ADA), Solana (SOL), and Stellar (XLM) saw declines exceeding 4–5%. Dogecoin and XRP also registered notable losses.
According to CoinGlass data, over 101,000 traders were liquidated across global futures markets in the past 24 hours, with total liquidation volume reaching $261 million**. Of this, **$184 million came from long positions—highlighting widespread bullish sentiment that was swiftly reversed by sudden bearish momentum.
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The largest single liquidation occurred on Bybit’s BTCUSD futures contract, amounting to $2.6 million, underscoring the high leverage used by many traders during volatile periods.
Despite the morning selloff, markets partially recovered in the afternoon. By evening, Bitcoin had rebounded to around $107,700, gaining 1%, while Ethereum and XRP narrowed their losses to under 1%. Cardano even turned slightly positive.
Broader Financial Markets Feel the Heat
The turbulence wasn’t limited to digital assets. Traditional equity markets also reacted nervously to macroeconomic uncertainty. Japan’s Nikkei 225 index dropped more than 1% at one point, while South Korea’s KOSPI briefly declined nearly 2% before recovering modestly at close.
U.S. stock futures followed a choppy trajectory. Nasdaq 100 futures initially rose but later turned negative, reflecting investor caution ahead of key economic data releases, including the upcoming initial jobless claims report.
Crypto-related stocks took a hit too:
- MicroStrategy sank nearly 8%, cutting its market cap to $102.1 billion.
- Coinbase Global fell over 4%
- SharpLink Gaming dropped close to 6%
- Robinhood Markets declined 1.39%
These moves reflect growing sensitivity in public markets to crypto sector sentiment, especially amid regulatory and macroeconomic uncertainty.
Why Did the "Big Beautiful" Bill Spook Investors?
The catalyst behind this wave of selling was the U.S. Senate’s narrow approval—by a 51–50 vote—of President Trump’s “Big Beautiful” tax and spending legislation on July 1.
While the bill aims to extend tax cuts originally passed in 2017, eliminate taxes on tips and overtime pay, boost defense and immigration enforcement funding, and revise renewable energy incentives, it has raised red flags among economists and investors alike.
Key provisions include:
- Extension of individual and corporate tax cuts set to expire in 2025
- Elimination of EV tax credits starting September 30, 2025
- Wind and solar projects must be operational by 2027 to qualify for tax breaks
- A proposed $5 trillion increase in the national debt ceiling, surpassing earlier House versions
- Reductions in Medicaid and nutrition assistance spending
The Congressional Budget Office estimates that the Senate version would add $3.3 trillion** to the federal deficit over the next decade (2025–2034), compared to $2.8 trillion under the House proposal. Additionally, changes to healthcare programs could leave nearly 12 million Americans without insurance** by 2034.
Investors fear that such aggressive fiscal expansion could fuel inflation, push interest rates higher for longer, and increase the risk of a U.S. sovereign default—especially if Congress fails to raise the spending cap later this year.
Investor Sentiment Turns Cautious
Market analysts point to a confluence of factors driving recent risk aversion.
Vincent Liu, Chief Investment Officer at Kronos Research, noted:
“The crypto market remains in a consolidation phase. Liquidity is thin, and participants are adopting a wait-and-see approach ahead of major economic data releases.”
Nick Ruck, Director at LVRG Research, added:
“Bitcoin’s pullback reflects pre-data caution. The passage of the 'Big Beautiful' bill has amplified concerns about fiscal sustainability and macroeconomic stability—two key drivers of crypto valuation.”
With elevated leverage across crypto derivatives markets and fragile confidence in traditional finance, even minor policy shifts can trigger outsized reactions.
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Elon Musk vs. Trump: A Public Feud Escalates
Adding fuel to the fire was a public clash between tech billionaire Elon Musk and former President Donald Trump.
On June 30, Musk launched a scathing critique of the “Big Beautiful” bill, posting dozens of messages online accusing lawmakers of fiscal irresponsibility. He even threatened to form a new political party—the “American Party”—if the bill passed.
Trump fired back early July 1, suggesting Musk had benefited disproportionately from government subsidies:
“Without those subsidies, he’d probably have to shut down and go back to South Africa.”
When asked whether he’d consider expelling Musk from the U.S., Trump replied: “I’ll have to think about that.”
Though likely rhetorical, the exchange intensified media scrutiny around both figures—and highlighted growing unease about policy direction ahead of the 2025 election cycle.
What This Means for Crypto Traders
This event underscores several critical lessons:
- High leverage magnifies losses during sudden reversals.
- Macro fundamentals matter—crypto is no longer an isolated market.
- Policy decisions in Washington can ripple through global risk assets within minutes.
- Sentiment shifts quickly, especially when liquidity is low.
Traders should consider:
- Reducing exposure before major news events
- Using stop-loss mechanisms
- Diversifying across asset classes
- Monitoring on-chain and derivatives data for early warning signs
Frequently Asked Questions (FAQ)
Q: What caused the recent crypto market crash?
A: The selloff was primarily triggered by the U.S. Senate passing the “Big Beautiful” tax and spending bill, which raised concerns about rising deficits and inflation—leading investors to flee risk assets.
Q: How many people were liquidated in the recent market move?
A: Over 101,000 traders were liquidated in 24 hours, with total losses exceeding $261 million, mostly from leveraged long positions.
Q: Is Bitcoin still a safe haven during economic uncertainty?
A: While Bitcoin is often viewed as digital gold, it remains highly speculative and sensitive to macro trends. During sharp risk-off moves, it often correlates with equities rather than decoupling.
Q: Could the “Big Beautiful” bill become law?
A: It must now pass the House of Representatives again—despite significant amendments made in the Senate. House Speaker Mike Johnson says they aim to vote by July 4.
Q: How does fiscal policy affect cryptocurrency prices?
A: Expansionary fiscal policies can weaken the U.S. dollar and raise inflation expectations, which may benefit crypto long-term—but short-term panic over debt sustainability often triggers sell-offs.
Q: What should I do during high-volatility periods?
A: Stay informed, avoid over-leveraging, use risk management tools, and consider dollar-cost averaging instead of timing volatile markets.
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