I'm not sure what the likelihood of escalation is but better becoming prepared for it as Trump can be an unpredictable showman. Who knows what China also have on their sleeves.
It's indeed an overreaction in the crypto space. Leverage always cuts both ways, and I think the flush is generally good for the market. A bit of a discount to cautiously buy the dip :)
I don't know either what exactly will follow on the geopolitical side.
Crypto market direction may be highly susceptible to those developments, particular with economic effects. As for buying the dip, yes, it is an option.