Japanese Yen and US Dollar decline, US-Europe tariff war intensifies! Bitcoin drops below 88,000, with liquidations of 1 billion USD

US-Europe Tariff War Escalates, Trump Uses Greenland to Pressure European Countries. Affected by geopolitical tensions and declines in the Japan-US bond market, Bitcoin drops below $88,000, with nearly $1 billion in long positions liquidated across the network, turning market sentiment to fear.

Bitcoin Falls Below 88K, $1 Billion Liquidated

Bitcoin ($BTC) has recently been under continuous downward pressure due to international political and economic developments, briefly dropping below $88,000 this morning (1/21). CoinGlass data shows that in the past 24 hours, the global cryptocurrency perpetual contract market experienced $1.07 billion in liquidations, with $998 million of that being long positions.

The Cryptocurrency Fear and Greed Index has also plummeted from the greed zone to 31, indicating market sentiment has shifted to fear.

Image source: CoinGlass

US-Europe Trade War Escalates, Impacting Bitcoin

The root cause of global risk asset market turbulence stems from the rapid escalation of the US-Europe tariff trade war.

President Trump of the United States threatened to impose additional tariffs on Denmark, France, Germany, the UK, and other European countries to acquire Greenland. If no agreement is reached, tariffs will be raised to 25% on June 1.

Trump even sent a letter to the Norwegian Prime Minister, linking the purchase of Greenland to the Nobel Peace Prize, and reiterated before heading to the Davos Forum that Greenland is very important to US national security.

In response to US pressure, the European Parliament is expected to suspend approval of the trade agreement reached with the US last July. French President Macron emphasized at the Davos Forum that the US continuously accumulates new tariffs, even using them as leverage to infringe on territorial sovereignty, which is unacceptable.

EU member states are drafting countermeasures, and the tariff exemptions on US goods, scheduled to expire on February 6, may automatically take effect if no new agreement is reached.

Japan-US Bond Yields Drop, Japan Bond Yield Surges Past 4%

Meanwhile, the Japanese bond market plunged yesterday, mainly due to investors voting against Prime Minister Fumio Kishida’s election pledge to cut food taxes, fearing this would lead to increased government spending and worsening inflation.

The yield on Japan’s 40-year government bonds rose to 4%, hitting a new high since issuance in 2007, and marking the first time in over 30 years that Japanese bond yields have reached this level.

Image source: CNBC

With Kishida having dissolved the House of Representatives, the early election scheduled for February 8 is expected to keep the bond market volatile.

On the other hand, CNBC reports that a sell America trend has emerged in the market, with US Treasury prices falling and yields soaring, causing the Dow Jones Industrial Average to plunge over 800 points at one point.

Krishna Guha, Head of Global Strategy at Evercore ISI, said that investors are reducing exposure to US assets and embracing safe-haven assets like gold, pushing gold prices to the largest single-day gain since 2020, breaking through $4,750 per ounce.

Further reading:
Worried about Bitcoin’s Quantum Threat! Jefferies Executive Converts BTC Holdings to Gold, Returning from Digital to Physical

Is Bitcoin Next to Drop to 85K?

Amid worsening macroeconomic conditions, Bitcoin’s future remains challenging.

According to Cointelegraph, CryptoQuant analyst MorenoDV cited data indicating that new whales holding Bitcoin for less than 155 days currently control the market price, but their cost basis is around $98,000, meaning these holdings are currently in serious loss, and the market lacks support from long-term holders.

Image source: MorenoDV

Trader XO analyzed that Bitcoin’s current trend has broken below the 21-day moving average and the 12-week exponential moving average (EMA). If it cannot rebound quickly, selling pressure may continue, potentially pushing the price toward the mid-$80,000 range.

Image source: Trader XO

Analysts predict that Bitcoin’s next move is highly likely to test the $85,000 level, possibly even dropping to $80,000. Market data shows a large number of short positions below $91,000, further fueling downward momentum.

This content is summarized by Crypto Agent from various sources, reviewed and edited by Crypto City. It is still in training, so there may be logical biases or informational errors. The content is for reference only and should not be considered investment advice.