As the cryptocurrency market entered a tumultuous week, the European Union’s response to new tariffs introduced by then-U.S. President Donald Trump significantly impacted global risk appetite. In the initial hours of Asian trading, the total market value of cryptocurrencies dropped by 3% in just a few hours, falling to $3.21 trillion, with Bitcoin leading the decline. Bitcoin, which had stabilized around $95,000 over the weekend, fell below $92,000 on some exchanges, suggesting high volatility for the week ahead. Concurrently, macroeconomic data releases and central bank decisions increased the sensitivity of cryptocurrency valuations during this period.
European–U.S. Tensions and Macroeconomic Pressure
The initial market reaction centered on Trump’s announcement of a 10% tariff on goods from eight European countries. Following the announcement, EU leaders convened an emergency meeting on Sunday to assess retaliatory measures. French President Emmanuel Macron called for the activation of the “anti-coercion instrument” known as the “trade bazooka,” designed to implement sanctions that could restrict U.S. access to European markets.
For the rest of the week, macroeconomic data served as another influential factor on the pricing of Bitcoin and altcoins. Traditional U.S. markets remained closed on Monday for Martin Luther King Jr. Day, while the effects of the cryptocurrency market’s sell-off were expected to be felt by Tuesday. Critical third-quarter GDP data and delayed November Personal Consumption Expenditures (PCE) inflation statistics were to be released on Thursday, holding significance for interest rate path expectations.
In Asia, China and Japan’s central banks’ interest rate decisions on Tuesday and Friday, respectively, were anticipated to influence volatility, especially in the highly leveraged cryptocurrency sector.
Volatile Price Movements in Cryptocurrencies
At the week’s outset, Bitcoin exhibited contrasting movement to gold, a traditional safe haven. Bitcoin swiftly dropped to weekly lows with a loss exceeding $3,500 during Asian trading and was unable to recover at the time of writing. Ethereum also saw a substantial drop but managed to stay above the $3,200 threshold.
The altcoin market witnessed more pronounced losses. XRP, Solana, Dogecoin, and Cardano experienced sharp devaluations during the day, while Monero stood out with a 10% increase, reaching $615. Market participants were closely monitoring the earnings reports of approximately 10% of S&P 500 companies and the World Economic Forum meetings starting in Switzerland.
In the coming days, geopolitical topics revolving around tariffs, inflation data, and central bank messages are expected to result in a short-term fluctuating trend within the cryptocurrency market.