Bitcoin Plunges Nearly $4,000 as Trump Tariff Threats Trigger EU-US Trade Tensions

Sharp Decline Amid Trade War Escalation

Bitcoin experienced a dramatic price collapse on Monday morning, falling approximately $3,500 to $4,000 as escalating trade tensions between the United States and European Union sent shockwaves through cryptocurrency markets ^[1][2]. The leading digital asset dropped from $95,450 to just below $92,000 on Coinbase, representing a decline of 3.6% within a matter of hours ^[1].

The broader cryptocurrency market suffered significant losses, with total market capitalization shrinking by approximately $110 billion and trading at $3.22 trillion ^[2]. Altcoins bore the brunt of the selling pressure, with tokens including PENGU, ASTER, LIT, SUI, and ONDO experiencing losses exceeding 12% ^[3]. Ethereum fell roughly 3.7% to below $3,200, while XRP declined nearly 5% and Solana dropped 7% ^[3].

Massive Liquidations Hit Leveraged Positions

The rapid price movement triggered substantial liquidations across crypto derivatives markets. Approximately $750 million in long positions were liquidated within a four-hour period, pushing total 24-hour liquidations above $860 million according to Coinglass data ^[1]. Bitcoin-related long positions accounted for over $223 million of these liquidations ^[2].

At the time of reporting, Bitcoin had partially recovered from its weekly low and was trading at $92,440 to $92,580 ^[1][2].

Trump Tariff Announcement Sparks Crisis

The market turmoil followed weekend announcements by President Donald Trump imposing 10% trade tariffs on eight European countries—Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, and the United Kingdom—effective February 1 ^[1][3]. Trump indicated these tariffs could escalate to 25% by June if no agreement is reached regarding his push to control Greenland ^[1][3].

Trump justified the tariffs by claiming that "NATO has been telling Denmark, for 20 years, that 'you have to get the Russian threat away from Greenland'" and that "Denmark has been unable to do anything about it" ^[2]. He characterized Greenland as essential to U.S. national security ^[2].

European Union Prepares Countermeasures

European leaders responded forcefully to the tariff threats. French President Emmanuel Macron urged the EU to activate its "anti-coercion instrument," described as a "trade bazooka," which could restrict U.S. access to EU markets ^[1][3]. The European Union is also considering implementing approximately 93 billion euros ($108 billion) in previously delayed retaliatory tariffs ^[1][3].

"At least judging from the first reactions, some European leaders are willing to play hardball," wrote Carsten Brzeski, global head of macro at ING ^[1].

Risk-Off Environment Emerges

Crypto industry analysts characterized the market response as a flight to safety. "I see Trump's tariffs over Greenland sparking trade war fears and creating a risk-off mood in markets," said Andri Fauzan Adziima, research lead at Bitrue ^[1]. "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," he added ^[1].

Jeff Mei, chief operations officer at BTSE exchange, noted that trade war threats "are causing a bout of market unease—especially since this time he is threatening some of America's closest allies" ^[1]. Mei suggested that institutional investors might move to de-risk their holdings if they perceive Trump's threats as credible ^[1].

Precious Metals Rally as Safe Haven

In stark contrast to cryptocurrency performance, precious metals surged to record levels. Gold futures climbed to historic highs of $4,667 to $4,680 per ounce, while silver futures exceeded $93 per ounce for the first time in history ^[1][2][3]. The divergence highlighted a decoupling between digital assets and traditional safe-haven commodities during the crisis ^[1].

Technical Support Levels in Focus

Bitcoin's price remains above its 50-day Simple Moving Average, which provides short-term support at $90,301 ^[2]. However, if selling pressure continues and Bitcoin breaches this technical level, analysts suggest the asset could decline toward the lower boundary around $89,000 ^[2].