Bitcoin price succumbed to a violent selloff on Monday while gold and silver surged to all-time highs following President Donald Trump‘s threat of sweeping new tariffs on European allies.
According to CryptoSlate’s data, BTC slipped below $93,000 within minutes during early Asian trading hours, after trading comfortably in the mid-$95,000s just moments earlier.
This price performance delivered a real-time stress test for the “digital gold” narrative. While traditional precious metals rallied to new highs on the prospect of geopolitical instability, the largest digital asset buckled.
This divergence highlights Bitcoin’s current role in the macro regime. In “risk-off” events, Bitcoin often behaves like a high-beta liquidity instrument that is sold first as portfolios de-risk, while gold rallies on the uncertainty itself.
Thus, the question for institutional allocators is not whether Bitcoin can be a hedge in the long run, but whether it can act like one during the first hour of a shock when liquidity is king.
US-EU tariff war
The immediate catalyst for Bitcoin’s price volatility was an unusually personal political ultimatum from the US President regarding Greenland.
Trump threatened to impose a 10% tariff on imports from eight European allies, including Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, starting Feb. 1.
He further threatened to ratchet that rate to 25% by June 1 unless Denmark agrees to the US’s demands regarding the territory.
European leaders condemned the approach, and EU officials began preparing a response that goes far beyond symbolic counter-tariffs.
According to the Financial Times, EU officials are considering tariffs of 93 billion euros (equivalent to $108 billion) or restricting American companies from the bloc’s market.
More important than the euro figure is the toolkit Europe is willing to consider. The EU’s Anti-Coercion Instrument (ACI) can extend beyond goods into services, investment, and procurement.
This represents the kind of escalation that markets interpret as a move from a standard trade dispute toward structural fragmentation.
The backdrop explains why precious metals didn’t merely rise but sprinted higher. It shows they are pricing in a world where policy risk becomes permanent rather than episodic.
Crypto market leverage flush
Despite the geopolitical trigger. Bitcoin’s downside appeared to be driven less by a shift in its fundamentals and more by market structure.
Thus, the immediate casualty of the news was traders who were speculating on crypto market prices via leveraged trades.
Vincent Liu, CIO of Kronos Research, told CryptoSlate that the selloff occurred as geopolitical headlines slammed into an “already fragile crypto market.”
So, as spot prices fell, hundreds of millions in liquidations cascaded through the market. This wiped out crowded long positions in a textbook example of how mechanical selling can magnify a modest headline move.
Indeed, CoinGlass data supports this view, showing that roughly $525 million in long liquidations occurred over about 60 minutes. Over a 24-hour period, that figure rose to around $790 million.
Bitcoin on-chain signals
Despite the headline shock, on-chain data suggests the Bitcoin market has not broken its broader structure.
In a recent report, crypto research firm Tiger Research described a BTC market that has shifted from “fear/undervaluation” to a more neutral, equilibrium state.
The firm noted that BTC’s key metrics are currently clustering around fair value, with MVRV-Z at approximately 1.25, NUPL at 0.39, and aSOPR near 1.00.
This is significant because fear-driven phases can produce explosive rallies as sentiment snaps back, whereas equilibrium phases tend to be range-bound until a strong catalyst shifts the regime.
Meanwhile, this view of a range-bound market is supported by recent options data.
Matrixport reported that implied volatility for both Bitcoin and Ethereum has only marginally increased despite renewed tariff threats from Trump.
In fact, the volatility of these assets has fallen sharply since mid-November, with a repricing of roughly 18 to 25 volatility points over the past two months.
This significant compression signals that traders are neither chasing upside through options nor aggressively hedging downside risk.
Instead, their positioning suggests a more nuanced approach to monetizing volatility in a low-leverage, range-driven market.
What next for Bitcoin?
Looking forward, there are three potential paths for Bitcoin as the tariff situation evolves.
In a de-escalation scenario over the next two to six weeks, where backchannels soften the stance, risk assets could stabilize.
This would allow Bitcoin’s post-liquidation bounce to carry toward the $98,000 mark, though a clean break above that level likely requires sustained positive flow.
However, the second and most probable path involves the 10% tariffs taking effect between February and April, but with retaliation contained.
In this case, Bitcoin may churn in the $84,000 to $98,000 band, with periodic leverage flushes on new headlines but no structural breakdown.
The third scenario involves escalation to 25% tariffs and broader EU measures into June.
If Europe deploys ACI-style pressure, markets may reprice growth more aggressively, increasing the likelihood that Bitcoin tests the $84,000 support, with the potential for an overshoot.
According to Liu of Kronos Research, Bitcoin’s near-term moves will hinge on structural support and derivatives positioning amid lingering leverage risk. He specifically pointed to the upcoming Initial Jobless Claims (Jan 22, 8:30 am ET) as a key event to watch, noting it could “trigger fresh volatility if macro signals shift the balance.”
Meanwhile, even if Bitcoin stumbles during the initial shock of a crisis, analysts note it can still benefit from what follows.
Tiger maintains a bullish longer-term projection, with a $185,500 target for the first quarter of the year.
According to the firm:
“While Bitcoin’s intrinsic value continues to trend higher over the medium to long term. Recent pullbacks appear consistent with healthy rebalancing, and the medium- to long-term bullish outlook remains intact.”
For now, however, gold is telling the future in the simplest way: markets are paying up for protection.
Bitcoin’s future may be bright, but this week’s tape showed that in a sudden macro shock, crypto remains a market that clears leverage first and writes the narrative later.