The cryptocurrency market suffered a sharp downturn this week, with Bitcoin sliding below $88,000 during Asian trading hours on Wednesday. In just a few days, more than $300 billion was wiped off the total crypto market value, reflecting a broader pullback from risk-heavy assets. As investors rushed toward traditional safe havens such as gold, the overall crypto market capitalization declined by roughly 4%.
This sudden sell-off was driven by rising geopolitical and macroeconomic tensions, particularly new tariff warnings from U.S. President Donald Trump aimed at Europe, along with an aggressive liquidation of Japanese government bonds (JGBs).
What Triggered the Sell-Off?
Bitcoin, the world’s largest digital asset by market value, has fallen about 10% over the past week, retreating to a price zone that has acted as support for nearly two months.
After the U.S. markets reopened following Monday’s public holiday, traders braced for volatility. Markets reacted to renewed concerns that the U.S. administration could impose additional 10–25% tariffs on European and NATO-aligned nations, linked to tensions surrounding Greenland.
Andri Fauzan Adziima, research lead at Bitrue, explained that the downturn seen on January 21 stemmed from renewed tariff threats, which sparked a global “risk-off” reaction. He added that this negative sentiment was intensified by large-scale selling in Japan’s bond market.
SoFi’s head of investment strategy, Liz Thomas, echoed this view, stating that Japan played a central role in amplifying the day’s market instability.
Ole Hansen, commodity strategy chief at Saxo Bank, pointed out that the sharp rise in long-term JGB yields signals stress in one of the world’s most dependable sources of liquidity — a development with global financial consequences, not just local ones.
Why This Matters: Fear Spreads Across Markets
When global liquidity tightens, high-risk assets are usually the first to suffer. Cryptocurrencies and technology stocks bore the brunt of this shift, while capital flowed into safer assets. Gold prices continued their upward trajectory as investors sought protection.
Michaël van de Poppe, founder of MF Fund, warned that sustained strength in gold prices often signals deepening investor fear. He noted that Bitcoin’s performance relative to gold is currently near historic lows, suggesting a strong preference for safety over speculation.
Altcoins Follow Bitcoin Lower
The sell-off was not limited to Bitcoin. Ethereum dropped roughly 7%, falling back to levels last seen in December. Other major assets, including Binance Coin, Monero, and Hyperliquid, also recorded notable declines. Across the broader market, most altcoins fell by 3–4%.
As a result, total cryptocurrency market capitalization has slid to approximately $3.08 trillion, positioning it near the bottom of its recent trading range.
