Donald Trump's renewed trade war has led to a disruption in the recent upward trajectory of the crypto market, causing Bitcoin to drop below $90,000.
On January 20, the day marking one year since Trump's inauguration as the new President of the US, the general crypto market is down by over 3%, with a total market capitalization of $3.04 trillion.
Trump's Trade War Resurfaces
Recently, Trump announced new tariffs on the EU, confirming his main strategic priority to acquire Greenland. His plans include a new 10% tariff on Denmark, Norway, Sweden, France, Germany, the UK, Netherlands, and Finland, set to begin on February 1st.
These tariffs are scheduled to increase by 25% on June 1st and will reportedly not be lifted until a deal is reached regarding Greenland. Trump has stated that this deal must involve "a complete and total purchase of Greenland."
The Kobeissi Letter analyzed the trade war from the past year, noting how tariffs are being reintroduced when markets are experiencing a surge and are least expected.
The most recent and noteworthy event occurred on October 10, when Trump threatened a 100% tariff on China, set to begin on November 1st. This date marked the latest significant collapse of the crypto market, when Bitcoin fell sharply amidst huge crypto liquidations exceeding $19 billion.
These moves are part of a consistent tariff playbook, where Trump utilizes these threats as a negotiation technique. In October, the tariff threats ultimately concluded with a trade deal with China.
Trump made the EU tariff threats this Saturday, January 17, ahead of a US holiday on January 19, Martin Luther King Jr. Day. Futures markets were closed on Sunday, and the market reaction manifested today, January 20.
Key Aspects of Trump's Tariff Playbook
The Kobeissi Letter highlighted important key points about this tariff playbook, noting how Trump often posts a cryptic message signaling upcoming tariffs ahead of or during the weekend, allowing markets to react after a period of pressure buildup and increased psychological impact.
They also describe the trader sentiment during the week following the tariff announcement, preceding an eventual resolution between Trump and the leaders of the countries targeted by the tariffs.
Typically, within the next 2 to 4 weeks, a trade deal is announced, and markets resume their upward trajectory, often reaching a new all-time high.
The ultimate objective remains consistent: Trump aims to reach a deal, and such tariffs historically do not go into effect.
EU Leaders Respond to Trump at WEF Meeting
During the World Economic Forum in Davos, French President Macron criticized Trump's tariff moves, which have opposed a US takeover of Greenland. He stated that the US President seeks to weaken and subordinate Europe, as reported by CNN.
Meanwhile, Ursula von der Leyen also emphasized that the EU and the US had already agreed to a trade deal in July 2025.
The crypto markets are currently experiencing volatility during this trade war period but are expected to recover once it concludes.
Bitcoin Price Trajectory
At the time of this article's writing, Bitcoin (BTC) is trading above $90,000, following a brief dip below this level. BTC has seen a 3% decrease in the past 25 hours, after trading above $95,000 on January 19.
Leading up to the recent volatility, BTC was on an upward trajectory, reaching prices over $97,000 on January 14, which had fueled hopes for a new all-time high.
Bitcoin Adoption Continues
Despite the current market fluctuations, the expectation is for Bitcoin to recover, driven by increasing global adoption, institutional interest, and notable acquisitions by BTC-centric companies.
On January 20, Michael Saylor announced that MicroStrategy had acquired over $2.1 billion in BTC, increasing its total holdings to 709,715 BTC, valued at over $64 billion at current prices.
Even with the market volatility, the industry should maintain optimism amidst strong Bitcoin and crypto adoption worldwide.