Bitcoin Falls Below $92,000: US-EU Trade Conflict Weighs on Crypto Markets

Flash Crash at Week's Start

The Bitcoin price came under significant pressure in the early hours of Monday morning. Within just 1.5 hours, the cryptocurrency fell from around $95,450 to temporarily below $92,000 ^[2]. The crash occurred immediately after the opening of futures trading at the CME at midnight and led to liquidations of long positions worth approximately $150 million in Bitcoin alone ^[2].

The market movement was once again triggered by international trade conflicts. Over the weekend, US President Donald Trump announced via his Truth Social platform that he would impose additional tariffs of 10 percent on goods from eight European countries starting February 1st ^[2]. The affected countries are Denmark, Norway, Sweden, France, Germany, Finland, the United Kingdom, and the Netherlands. According to Trump, these tariffs are set to increase to 25 percent as of June 1st ^[1][2].

Analysts Expect Further Price Declines

Traders and analysts are anticipating continued volatility in the coming weeks. "Get ready for a volatile week ahead!" warned trader CrypNuevo in an analysis ^[1]. Several observers see important support levels in the $87,000 range as well as at the recent trading range lows around $80,500 as potential targets ^[1].

CrypNuevo explained: "Markets don't like uncertainty, but markets like when the uncertainty disappears. So I'm leaning to some downside pressure pushing price back inside the range and potentially trading into the range lows, before any real reversal" ^[1]. A look at exchange order books also shows that long liquidations are accumulating below the year's opening price, which increases the probability of another liquidity run to the downside ^[1].

Trump's Tariff Strategy and Market Reactions

The current situation is reminiscent of the so-called "Liberation Day" in early April 2025, when Trump introduced his reciprocal tariffs and Bitcoin subsequently fell to a local low below $75,000 ^[1][2]. Analysts from The Kobeissi Letter point to a recurring pattern in Trump's tariff policy, which they refer to as the "Tariff Playbook" ^[1].

This consists of twelve phases that extend over several weeks. "President Trump ALWAYS leads with a punishing and threatening message, it's part of his negotiation tactic. And, it has worked for him," wrote The Kobeissi Letter ^[1]. The pattern typically ends with a trade agreement and new record highs in the markets ^[1].

EU Prepares Countermeasures

The European Union responded immediately to Trump's announcement. On Sunday, representatives of the affected countries met to discuss countermeasures ^[2]. A joint statement read: "Tariff threats undermine transatlantic relations and carry the risk of escalation. We are determined to preserve our sovereignty" ^[2].

According to media reports, the EU is considering retaliatory tariffs worth 93 billion euros against the United States ^[2]. Tariffs on US bourbon, aircraft parts, soybeans, and poultry already designated in July would automatically take effect on February 6th if no agreement is reached ^[2]. A special summit with the 27 EU heads of state and government is scheduled to take place in Brussels on Thursday ^[2].

Gold Profits, Bitcoin Shows Structural Improvements

While Bitcoin and other risk assets are suffering from the uncertainty, precious metals are benefiting from the current environment. Gold approached the $5,000 per ounce mark for the first time last week, while silver reached new all-time highs of $94 ^[1].

Nevertheless, analysts see positive signs for Bitcoin in the medium term. The onchain analytics platform CryptoQuant found that the recent recovery was not driven by leveraged futures trading, but by genuine buying demand in the spot market ^[1]. "The recent Bitcoin rebound is not a leverage-driven futures rally, but a move initiated by the recovery of real buying demand in the spot market," explained CryptoQuant analyst COINDREAM ^[1].

Open interest in derivatives has fallen by almost 17.5 percent in Bitcoin terms since the all-time highs in October, indicating a significant reduction in leverage in the system ^[1].