Market Divergence Fueled by Geopolitical Tensions
Gold reached an unprecedented all-time high of $4,690 per ounce, while Bitcoin experienced a significant downturn, falling below $93,000. This sharp contrast in market performance occurred as investors retreated from riskier assets following President Donald Trump's announcement of tariffs on eight European nations. These tariffs are linked to his administration's efforts to acquire Greenland.
Tariff Announcement and International Response
President Trump revealed that 10% tariffs would be imposed on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland on January 17. The duties are scheduled to increase to 25% on June 1. These measures are intended to remain in place until the United States successfully negotiates an agreement to purchase Greenland.
In response, representatives from the affected countries convened emergency discussions on Sunday. European Commission President Ursula von der Leyen and European Council President António Costa issued a joint statement affirming that the European Union "stands in full solidarity" with Denmark and the citizens of Greenland.
According to reports, the EU is contemplating a package of countermeasures. These could potentially include tariffs valued at up to €93 billion ($107.71 billion) or restrictions on U.S. companies' access to the European market. At the time of reporting, Bitcoin had fallen to $92,574, marking a 2.67% decrease over the preceding 24 hours. The total cryptocurrency market capitalization also saw a decline of nearly $98 billion.
This market selloff resulted in liquidations totaling $864.35 million across the cryptocurrency market, with long positions accounting for over $780 million of that amount. The Kobeissi Letter highlighted this trend, stating, "Bitcoin falls nearly -$4,000 as $500 million worth of levered longs are liquidated in 60 minutes."
The Renewed Safe Haven Debate
The contrasting performance of gold and Bitcoin has reignited the discussion surrounding Bitcoin's efficacy as a store of value during periods of geopolitical uncertainty. Analyst Timothy Peterson observed that despite Bitcoin's 24/7 trading cycle, its price did not show a reaction for approximately 36 hours after President Trump's announcement. He commented, "This illustrates how most intraday 'news' about price movements is usually an irrelevant storyline told after the fact."
Mike McGlone, senior commodity strategist at Bloomberg Intelligence, suggested that the Bitcoin-to-gold ratio is more likely to continue its downward trend, potentially moving towards 10x, rather than reverting to a 30x ratio in Bitcoin's favor.
Economist Peter Schiff expressed a more definitive view. He stated, "Everyone expects Bitcoin to follow gold's lead and rally to new highs. But the market has given speculators way too much time to buy. What's far more likely is that Bitcoin's failure to match gold's gains undermines its narrative as digital gold, resulting in a spectacular crash."
Veteran trader Peter Brandt predicted that U.S. dollar-denominated assets would depreciate in value relative to physical commodities, although he remained uncertain about Bitcoin's specific role in this potential shift. He further added, "Altcoins will become more worthless than USDs."