Originally written by Jake Simmons. Source: NewsBTC
On Sunday late in New York, Bitcoin dropped to around $91,920, declining 3.8% from approximately $95,500. This decline was part of a broader risk-off sentiment impacting crypto markets and quickly spilling over into high volatility major assets. Ethereum fell as much as 5.3% to $3,177, with XRP and Solana experiencing sharper drops of 10.4% to $1.847 and 9% to $130, respectively, as leveraged positions were increasingly liquidated.
Immediate Catalyst: Geopolitical Trade Tensions
The main trigger of this sell-off was geopolitics intersecting with trade news during a liquidity-thin weekend. The former US President Donald Trump announced plans to impose an additional 10% tariff starting February 1st on imports from several European countries — Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland — with tariffs set to rise to 25% by June 1st unless Greenland is acquired by the US.
European officials viewed this move as coercive, triggering coordinated pushback. Notably, Dutch Foreign Minister David van Weel called the move "blackmail" that undermined NATO alliance efficacy. The targeted countries warned against a dangerous downward spiral in transatlantic relations with threats of retaliation being discussed at the EU level.
French President Emmanuel Macron went as far as calling for the activation of the EU’s "most potent trade weapon," the anti-coercion instrument, against the US, signaling a potential escalation in trade conflict.
Impact on Crypto Markets
For Bitcoin and crypto, the significance lies not in the tariff percentages themselves but the abrupt change this represents for global growth expectations and policy risk. Macro traders tend to de-risk quickly when such geopolitical headlines hit, and liquid markets usually absorb the shock first. Crypto markets, which operate 24/7 and have a deep derivatives ecosystem, often become an immediate pressure relief valve.
On-chain data and exchange-level indicators suggest the sell pressure was not limited to offshore flows. CryptoQuant analyst Mignolet pointed to a heightened Coinbase Premium Gap (CPG) — which tracks price differences between Coinbase's USD market and Binance's USDT market — often considered a proxy for US-led demand or supply.
He noted this as the strongest selling pressure in recent times from US-based whales operating outside of ETF frameworks, especially since ETF markets were closed during the weekend. This implies the selling was largely from spot, OTC, and derivatives channels that remain active.
Liquidations Fueled Further Declines
Once Bitcoin dropped below critical support levels, futures market dynamics intensified the downward move. Data from Coinglass reported that 249,422 traders were liquidated in a 24-hour span, with total liquidation losses nearing $875 million. Long positions made up the vast majority of this at about $788 million, reflecting forced closures of crowded long bets.
At the time of writing, Bitcoin had recovered slightly to around $93,000.
Industry Context
Events like these highlight the interconnectedness of geopolitical developments and crypto market dynamics. For developers and operators involved in cryptocurrency mining and infrastructure, understanding these market drivers is crucial.
Platforms like OneMiners offer insights into crypto mining hardware and hosting solutions that must adapt to market volatility. Meanwhile, companies such as IceRiver.eu provide specialized ASIC miners and mining infrastructure tailored for the European market, navigating the nuances of trade and regulatory uncertainties.
What are your thoughts on how geopolitical risks influence crypto market behavior? Have you noticed these impacts in your development or trading activities? Share your experiences and insights below!
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