A sudden announcement of new U.S. tariffs sent shockwaves through global markets on Monday, with Bitcoin caught in the downdraft. The leading cryptocurrency dropped below $93,000, a notable retreat from its recent push toward $98,000 just last week. This move triggered a cascade of liquidations, wiping out approximately $600 million in bullish leveraged positions as investors fled risk-sensitive assets.
Geopolitical Announcement Sparks Broad Sell-Off
The market turmoil originated from a weekend statement by U.S. President Donald Trump. He unveiled plans to impose 10% tariffs on goods from eight European nations, effective February 1. The policy includes a provision to raise these rates to 25% in June if no agreement is reached. This development prompted a classic flight to safety: gold and silver prices climbed to record highs, while equity futures declined. Mirroring the behavior of traditional risk assets, Bitcoin’s price fell in tandem, at one point trading around $92,500—a decline of 2.5% to 3% over a 24-hour period.
Market analysts highlighted the event as a clear demonstration of Bitcoin’s growing correlation with broader risk sentiment. The retreat from speculative bets was most acutely felt in the derivatives market. Data from Coinglass indicates that between $600 million and $680 million in long positions were forcibly closed.
Underlying Market Weakness Exposed
On-chain analytics from firms like Glassnode and CryptoQuant reveal a deeper structural concern. The recent price advance toward $96,000 appears to have been fueled primarily by activity in derivatives markets rather than strong spot buying demand. While long-term holders have slowed their selling, a formidable resistance level persists around the $101,000 mark, represented by the 365-day moving average. A reduction in open derivatives interest further signals waning confidence among traders.
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The broader digital asset market shed roughly $100 billion in total capitalization during the sell-off. Alternative cryptocurrencies, or altcoins, experienced even steeper declines. Ethereum fell by as much as 4.9%, while Solana dropped 8.6%. Tokens associated with gaming and decentralized finance (GameFi) led the downturn with losses averaging 8.6%.
Regulatory Uncertainty Adds to Pressure
Compounding the negative sentiment is a delay in U.S. crypto legislation. The progress of the CLARITY Act, a draft bill for comprehensive digital asset regulation, has stalled. The setback followed Coinbase CEO Brian Armstrong’s withdrawal of support, citing objections to specific provisions concerning stablecoin yields and the Securities and Exchange Commission’s authority. The Senate Banking Committee has not announced a new timeline for review.
Despite these headwinds, institutional involvement remains a significant feature of the market. BlackRock’s spot Bitcoin ETF, IBIT, now oversees more than $72 billion in assets. In a landmark move, the state of Texas recently became the first U.S. state to allocate Bitcoin to its strategic reserve. Furthermore, spot Bitcoin ETFs saw net inflows of approximately $400 million in early January.
Key Technical Levels to Watch
Market participants are now closely monitoring Bitcoin’s ability to defend a crucial support band between $90,000 and $92,000. A sustained break below this zone could accelerate selling pressure. On the upside, immediate resistance is situated between $95,000 and $96,000, with the more significant medium-term hurdle remaining at $101,000. The coming days will be critical in determining whether the market stabilizes or if the corrective move gathers further momentum.
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