Introduction
A stock market crash worldwide, which started on April 2nd, 2025, caused trillions of dollars worth of financial assets to be wiped out within days.
What caused it?
The main factor that caused the crash was President Trump’s trade policies. Tariffs were seen as an economic concern to investors, which caused uncertainty and fear in the markets. These policies triggered a sell-off in the market, which led to a massive dump in price. Trump imposed a 10% tariff on all countries. He later imposed 25% tariffs on aluminum and automobiles, which caused more people to sell in the market, resulting in an even bigger loss.
What was lost?
The moment the tariffs were announced, the stock market lost 2 trillion dollars. The following day $3.1 trillion was wiped from the stock market. Previously, around $6 trillion was also wiped before the tariffs, resulting in about a $11 trillion loss in the stock market since Trump’s inauguration. In the cryptocurrency market, $1 trillion was wiped. At the time of writing this article, the market is recovering, but it will take some time for the economy to fully recover the loss.
Why people shouldn’t worry
As some panicked and sold in the market, other investors saw it as an opportunity to get everything at a low price, while others didn’t invest at all due to the uncertainty in the market. While there is still some uncertainty in the market, day-traders have gotten used to what they call “Trump Markets” to become profitable again. Long-term investors are also taking advantage of buying stocks at a discount, knowing they could see large profits if no major news disrupts the markets. The market will recover. However, it is still uncertain when it will recover.
How people took advantage of it
There were many people who lost millions of dollars from the crash. However, others didn’t panic and decided to short stocks. Shorting stocks is betting that the stock will lower and selling borrowed shares, repurchasing them at a lower price and returning the shares later. This resulted in many people earning thousands to millions of dollars within the course of a couple days or even minutes. One unknown crypto wallet opened a short position worth $516 million and closed the position 8 days later securing $9.4 million. Investors could have made a lot more than $9.4 million but crypto wallets are easier to track. Other investors took advantage with leverage, which is using borrowed capital for investing to open large positions at higher risk of losing all their money.
Conclusion
In conclusion, the 2025 stock market crash allowed investors and the global economy to wake up. As recovery begins, it allows people to make smarter decisions and to avoid losing out on the opportunity again.
Works Cited:
- Beers, B. (n.d.). Short selling: How it works. Investopedia. https://www.investopedia.com/articles/investing/100913/basics-short-selling.asp#:~:text=In%20a%20short%20sale%2C%20investors,buyback%20price%20is%20the%20profit
- Beers, B. (n.d.-a). Short selling: How it works. Investopedia. https://www.investopedia.com/articles/investing/100913/basics-short-selling.asp#:~:text=In%20a%20short%20sale%2C%20investors,buyback%20price%20is%20the%20profit
