Bitcoin and other major cryptocurrencies experienced a significant decline today as escalating fears of a potential trade war between the United States and the European Union triggered over $864 million in liquidations across the cryptocurrency market.
Market Overview and Key Developments
According to data from crypto.news, the Bitcoin (BTC) price fell sharply from $95,419 to $92,284 during early Asian hours on Monday, marking a loss of 3% before stabilizing around $92,672 at press time.
Other major cryptocurrencies such as Ethereum (ETH), BNB (BNB), XRP (XRP), and Solana (SOL) also experienced declines alongside Bitcoin, contributing to a 2.8% drop in the total crypto market capitalization, which settled at $3.22 trillion during the session.
The market downturn resulted in over $864 million in liquidations across the crypto market, with $783 million stemming from long liquidations. Data from CoinGlass indicates that the majority of these liquidations occurred within the past 12 hours. Long liquidations are triggered when a price decrease forces traders with bullish positions to sell their holdings to meet margin requirements, potentially creating a self-reinforcing downward trend.
Analysts attribute today's sharp decline to investor concerns that escalating trade tensions between the U.S. and the EU could be on the verge of developing into a full-scale trade war.
Geopolitical Tensions and Regulatory Uncertainty
Earlier, U.S. President Donald Trump had issued threats to EU nations, including Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland, stating that they must sell Greenland to the United States or face escalating tariffs beginning at 10% from February 1. These tariffs are slated to increase to 25% by June if no agreement is reached.
European leaders have characterized this demand as direct blackmail and warned that it could damage transatlantic relations and the fundamental cohesion of the NATO alliance. In response, EU officials are reportedly preparing retaliatory measures, which may include imposing duties on approximately 93 billion euros worth of American goods and activating the bloc’s anti-coercion instrument.
This surge in geopolitical uncertainty has introduced new volatility into market sentiment. This was compounded by a delay in the Senate markup for the highly anticipated U.S. crypto market structure bill. Following the withdrawal of support from significant industry players like Coinbase, the Senate Banking Committee decided to postpone its markup hearing for the Digital Asset Market Clarity Act. The hearing was originally scheduled for last Thursday and has not yet been rescheduled.
Further bearish pressure has emerged as outflows have returned to spot Bitcoin ETFs. Data from SoSoValue reveals that the 12 spot Bitcoin ETFs experienced net outflows totaling $394.68 million on Friday, January 16. This follows a four-day period of inflows where the funds attracted $1.8 billion.
Bitcoin Price Analysis
On the daily chart, the Bitcoin price is approaching a critical ascending trendline that has provided support since late November of the previous year. This trendline support coincides with the 50-day simple moving average, forming a significant technical confluence zone.
A break below this support level could lead to Bitcoin testing the December 18 low of $84,500. Conversely, if Bitcoin manages to rebound above the 50-day SMA, it could trigger a relief rally towards the $98,000 resistance zone.
Momentum indicators, such as the MACD and RSI, currently suggest a bearish outlook. The MACD line has formed a bearish crossover with its signal line, and the RSI has moved closer to the neutral line after previously reaching overbought levels last week.
