The cryptocurrency market faced significant turmoil on Monday, witnessing total liquidations exceeding $800 million within a mere 24-hour period. This drastic downturn is primarily attributed to an increasing risk-off sentiment among traders, spurred by escalating trade tensions between the European Union (EU) and the United States (US).
As trading resumed for the week, Bitcoin (BTC) fell below $93,000, prompting a notable decline among major altcoins such as Ethereum (ETH), Solana (SOL), and Cardano (ADA). The dip in crypto prices coincided with reports of heightened tensions concerning trade relations between the US and the EU.
In a provocative move, US President Donald Trump announced plans to impose tariffs on eight European nations that have opposed his initiative to acquire Greenland. Specifically, Trump declared a 10% tariff on goods from Denmark, Sweden, France, Germany, the Netherlands, Finland, the United Kingdom, and Norway, set to take effect on February 1. This announcement was met with immediate repercussions, as it intensified trade frictions and dampened investor appetite for riskier assets, including those in the cryptocurrency realm.
In response to these developments, EU capitals are reportedly deliberating a counter-strategy involving €93 billion (approximately $101 billion) in tariffs on US products or imposing restrictions on American companies’ accessibility to the European market. Such retaliatory measures would only deepen the existing rift and contribute to an overall atmosphere of uncertainty.
This surge in trade-related anxieties prompted a wave of liquidations in the crypto market, affecting predominantly long positions. Data from Coinglass reveals that an overwhelming 90.5% of liquidations were long positions, a reflection of the market’s previous bullish sentiment. The largest single liquidation during this tumultuous period occurred on the Hyperliquid platform, where a BTCUSDT position valued at $25.83 million was wiped out.
Furthermore, the market’s psychological landscape is indicated by the Fear and Greed Index, which plummeted to 44 on Monday, a stark decline from a high of 61 recorded just last Thursday. This shift illustrates a move from optimism toward a more cautious and wary market sentiment, signaling growing concerns among traders about the potential implications of ongoing trade disputes on their investments.
