Crypto prices experienced a significant downturn on Monday morning, with the total cryptocurrency market capitalization declining by 2.4% to $3.2 trillion. This drop reflects a deteriorating investor sentiment, further exacerbated by fresh concerns over an escalating trade war.
Market Overview
Bitcoin (BTC), the world's largest cryptocurrency asset, saw its price fall by 3% to nearly $92,250 during early Asian trading hours on Monday. It later stabilized slightly higher at $92,739 at press time.
Ethereum (ETH) was down 3.1%, trading at $3,200. Other major altcoins, including BNB (BNB), XRP (XRP), Solana (SOL), and Dogecoin (DOGE), posted losses ranging from 3% to 8% in the preceding 24 hours. Notably, Ondo (ONDO), Aster (ASTER), and Sui (SUI) were among the top performers, each experiencing losses of approximately 10%.
The broader crypto market faced substantial liquidations, with over $783 million in bullish bets being erased from the futures market within the last 24 hours. CoinGlass data indicates that the majority of these liquidations occurred in the first 12 hours of this period.
Trade War Concerns Intensify
Analysts suggest that the renewed market volatility may stem from investors reallocating capital towards perceived safer assets like Gold and Silver. This shift occurred after U.S. President Donald Trump reportedly threatened several European nations, including Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland, with escalating tariffs. These tariffs, initially set at 10% from February 1, could potentially rise to 25% by June if an agreement is not reached regarding the annexation of Greenland into the United States.
In response, the European Commission and regional leaders have characterized the move as blackmail and have indicated their intention to implement retaliatory measures against the U.S. These potential countermeasures include imposing duties on approximately 93 billion euros worth of American exports.
Historically, geopolitical tensions of this nature have a significant impact on market sentiment, often triggering prolonged selloffs. A similar situation unfolded in October of the previous year when escalating U.S.-China tariff hostilities led investors to broadly divest from riskier assets. During that period, Bitcoin experienced a decline of nearly 25% by late 2025 before finding stability. Concurrently, the global market capitalization had fallen by almost 32% to $2.96 trillion by late December.
While the current selloff is comparatively milder than the one witnessed during the U.S.-China tariff war, historical patterns suggest that protracted disputes without clear resolutions could lead to increased panic within the crypto market.
Regulatory Uncertainty Dampens Investor Appetite
Adding to the market's pressure, progress on key cryptocurrency regulations in the U.S. has encountered delays, potentially contributing to further losses.
A significant bill concerning crypto market structure faced a setback last week when the Senate Banking Committee postponed its scheduled markup of the CLARITY Act. This delay follows a notable withdrawal of support from industry figures, including Coinbase CEO Brian Armstrong. The committee has yet to announce a new date for the hearing.
Market sentiment has also been negatively affected by questions raised by U.S. Supreme Court justices regarding the legality of President Trump's controversial tariffs. A final ruling from the nation's highest court is now pending.
As of press time, the Crypto Fear and Greed Index, a metric used to gauge market sentiment, has dropped to 44 over the past 24 hours, marking a 5-point decrease and signaling a move into "fear" territory.
Bitcoin Drops Below Key Support Level
The price of Bitcoin has fallen below the $95,000 mark, a crucial psychological support level that had been underpinning bullish momentum.
As previously reported, breaking below this threshold has brought Bitcoin closer to another significant trendline support at $90,334, which had previously served as a vital base for the asset.
Looking forward, Bitcoin and the broader crypto market may also face a lack of support from Federal Reserve interest rate cuts, which have historically benefited risk assets.
Analysts at J.P. Morgan anticipate that the Federal Reserve will maintain current interest rates unchanged throughout 2026.