Bitcoin faced sharp selling pressure during the early Asian trading session on Monday, as renewed U.S.–EU trade war fears rattled global risk markets and triggered one of the largest liquidation events of the month.
Thin Liquidity Amplifies the Move
The sell-off unfolded while U.S. stock and bond markets remained closed for the Martin Luther King Jr. Day holiday, leaving crypto markets exposed to thin liquidity and heightened volatility. Against this backdrop, Bitcoin slid 3.1%, falling from $95,385 to $92,415.
The abrupt move wiped out over $865 million in leveraged positions, with roughly 90% of liquidations hitting bullish traders who had positioned for a continuation of last week’s rally. Analysts say the drop effectively flushed excess leverage from the system, resetting short-term market positioning.
Altcoins and Market Cap Take a Hit
The pullback was not limited to Bitcoin. Altcoins sold off aggressively, dragging total crypto market capitalization down 2.8% to $3.26 trillion over 24 hours. Since last Thursday, the market has shed more than $111 billion in value, highlighting how quickly sentiment shifted from optimism to caution.
Despite the severity of the liquidations, derivatives data suggests the move was more mechanical than panic-driven, driven by forced unwinds rather than sustained spot selling.
Trade War Rhetoric Returns
At the center of the market unease is a resurgence of U.S.-EU trade tensions, just as global leaders convene in Davos for the World Economic Forum. Over the weekend, Donald Trump threatened to impose punitive tariffs on Greenland and several European allies if they fail to support U.S. plans to annex the territory.
Trump announced that eight countries could face 10% export tariffs, a move that immediately reignited concerns about a broader trade conflict between Washington and Brussels. Crypto markets reacted swiftly, reflecting their growing sensitivity to macro and geopolitical shocks.
Officials Stoke Geopolitical Anxiety
The rhetoric was reinforced by Scott Bessent, who echoed Trump’s stance, stating that “the fight for the Arctic is real” and arguing that it would be in America’s strategic interest for Greenland to become part of the U.S. Bessent added that Europe is too weak to ensure its own security, comments that further unsettled global markets.
These developments added to a broader risk-off tone across equities, commodities, and digital assets, with investors reassessing exposure amid rising uncertainty.
Analysts Point to Macro Drivers
Market observers were quick to note that the sell-off was not driven by crypto-specific issues. Ryan Lee, chief analyst at Bitget, said the pullback reflects a broader shift in sentiment.
He pointed to heightened macro uncertainty and profit-taking following a strong run as key factors pushing investors into a more cautious stance.
What Comes Next for Bitcoin
Looking ahead, Lee expects Bitcoin to consolidate rather than trend aggressively in either direction. He said the asset is likely to trade in a tight range through the second half of January, with key support forming around the mid-$80,000 level.
For now, the liquidation cascade appears to have cleansed overheated positioning, potentially setting the stage for more stable price action. However, with geopolitical headlines dominating sentiment, traders remain on edge, watching whether trade tensions escalate further-or cool just as quickly.
