Bitcoin experienced a significant drop of nearly $3,500 on Monday, coinciding with European indications of retaliatory measures against United States President Donald Trump. These actions were prompted by Trump's threat of new trade tariffs unless negotiations concerning Greenland commenced.
Bitcoin (BTC) prices saw a 3.6% decline within a few hours, falling from $95,450 to just below $92,000 on Coinbase in early Monday trading, according to TradingView data. This sharp decrease led to the liquidation of approximately $750 million in long positions within a four-hour period. Total 24-hour liquidations exceeded $860 million, as reported by Coinglass. At the time of writing, the asset had shown a marginal recovery, trading at $92,580.
In contrast, precious metals have surged, continuing their trend of decoupling from digital assets. Stock futures also registered a decline.
Gold futures reached record highs of $4,667 per ounce as markets reacted to the rekindled US-EU trade tensions, according to Google Finance. Silver futures similarly experienced a substantial increase, surpassing $93 per ounce for the first time in history.
Europe's Response to Trump's Tariffs
Over the weekend, President Trump announced the imposition of 10% trade tariffs on eight European countries: Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, and the United Kingdom. These tariffs were scheduled to take effect on February 1st.
The tariffs were set to increase to 25% by June if no agreement was reached regarding his proposal to control Greenland.
European leaders responded with strong opposition. French President Emmanuel Macron urged the European Union to activate its "anti-coercion instrument," commonly referred to as a "trade bazooka." This instrument could potentially restrict US access to EU markets.
The European Union is also reportedly considering the implementation of 93 billion euros ($108 billion) in previously delayed retaliatory tariffs.
"At least judging from the first reactions, some European leaders are willing to play hardball," wrote Carsten Brzeski, global head of macro at ING, as reported by CNN.
Trade War Concerns Fuel a Risk-Off Market Sentiment
Analysts within the cryptocurrency industry indicated to Cointelegraph that the escalating trade war could foster a risk-off environment across financial markets.
"I see Trump’s tariffs over Greenland sparking trade war fears and creating a risk-off mood in markets," stated Andri Fauzan Adziima, research lead at Bitrue.
He further elaborated, "Bitcoin, acting like a tech stock, dropped below $93,000 due to liquidations and FUD, showing how it gets hit hard by big economic shakes. Short-term pain continues, but both could rise long-term if money weakening happens."
Meanwhile, Jeff Mei, chief operations officer at the BTSE exchange, commented that trade war threats are "causing a bout of market unease — especially since this time he is threatening some of America's closest allies."
"Right now, traders are thinking about the worst-case scenario, in which markets could plunge to April 2025 levels. Once the U.S. market opens, it’s possible that institutional investors may move to de-risk their holdings if they think Trump’s threats are serious."