Bitcoin plunged below $88,000 during early Asian trading Wednesday as the cryptocurrency market shed more than $200 billion since the weekend, with total market capitalization falling 4% amid a flight to safe-haven assets like gold driven by President Donald Trump's renewed tariff threats against Europe and a sharp sell-off in Japanese government bonds.
What Happened: Crypto Markets Tank
The largest cryptocurrency by market cap has lost 10% over the past seven days, falling back to support levels within a two-month range-bound channel.
Major volatility had been expected following the U.S. public holiday on Monday, as traders digested the administration's latest round of 10-25% tariff threats on European and NATO countries over the Greenland dispute.
"The cryptocurrency market crashed on January 21, primarily due to broad risk-off sentiment from President Trump's renewed 10–25% tariff threats on European/NATO countries over the Greenland dispute, amplified by a sharp Japanese government bond sell-off," said Andri Fauzan Adziima, research lead at Bitrue.
Liz Thomas, head of investment strategy at SoFi, noted that "much of today's market upheaval stems from Japan."
Ole Hansen, head of commodity strategy at Saxo Bank, explained that "the relentless surge in long-dated JGB yields signals that one of the world's most reliable liquidity backstops is fading, with consequences that extend well beyond Tokyo."
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Why It Matters: Risk-Off Panic
Pressure on global liquidity hits risk-on assets such as cryptocurrencies and tech stocks first, while safe-haven instruments benefit. Gold continues to surge.
Michaël van de Poppe, founder of MF Fund, warned that if gold keeps gaining, there's "max panic taking place on the markets, as people run into risk-off assets." He noted that Bitcoin's valuation relative to gold has never been this low.
Ethereum dumped 7% to hit $2,925, returning to December lows. Binance Coin, Monero, and Hyperliquid posted substantial losses, while most altcoins fell 3-4%.
Total market cap dropped to the lower bounds of its sideways channel at $3.08 trillion.
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