Why did Bitcoin plummet today? Trump's Cuban tariffs and the US-Iran conflict triggered a wave of 460 million liquidations

Bitcoin plummeted 6% to $83,000 on January 29. Three major negatives: Trump’s declaration of a national emergency threatens Cuban oil tariffs, the escalation of the US-Iran conflict, and concerns about a government shutdown. Structural pressure is even more deadly, with a net outflow of 4,600 ETFs at the beginning of the year, and retail demand collapsing. liquidations exceeded $4.6 billion, and $83,000 became a life-and-death line.

Trump’s Cuban tariff order detonated market panic

On Thursday (January 29), local time, U.S. President Trump signed an executive order declaring a national emergency, threatening to impose ad valorem tariffs on goods exported to the United States from countries that provide oil to Cuba. According to the fact sheet released by the White House, the order authorizes the Secretary of State and the Secretary of Commerce to take all necessary actions, including issuing rules and guidance, to implement the tariff system and related measures.

In the order, Trump said: “The Cuban government has taken extraordinary actions that have caused harm and pose a threat to the United States. The regime has allied with and supported – and for many hostile countries, transnational terrorist organizations, and malicious actors against the United States.” The order requires the U.S. Department of Commerce to identify countries that may provide oil to Cuba, and said it is then up to senior government officials to decide what additional tariffs should be imposed.

This policy directly impacts Latin American countries such as Mexico. As Venezuela’s support for Cuba wanes, Mexico has become one of the few remaining fuel suppliers to Cuba. Trump posted on social media earlier this month: “There will be no more oil or money flowing to Cuba - zero!” He also urged the leadership of the island nation to “reach an agreement as soon as possible.”

Hours before Trump’s move, Mexican President Claudia Sheinbaum said she had a “friendly” call with Trump, which included trade discussions but did not involve Cuban policy. However, this tariff threat may re-intensify US-Mexico trade frictions, exacerbating market concerns about the deterioration of the global trade environment. Historically, Trump’s tariff policies have often caused sharp market fluctuations, and this time is no exception.

The double negative impact of the US-Iran conflict and the government shutdown

Geopolitical risks resurfaced after Washington issued new warnings to Tehran, while Iran said it was ready to respond forcefully to any military escalation. Naval actions and new sanctions rhetoric in the Middle East have raised concerns about miscarriages, especially as diplomatic channels remain strained. The entry of US aircraft carrier strike groups into the area is expected to increase the likelihood of conflict.

The market often views the early stages of geopolitical escalation as a safe-haven signal rather than a hedging strategy. For Bitcoin, this usually means short-term de-risking, especially if leverage is high and illiquidity is insufficient. Investors still choose traditional safe-haven assets like gold and U.S. Treasuries over Bitcoin in real times of crisis.

The three major macro risks converge at the same time

Trump’s Cuban tariff order: Threatened to impose tariffs on Mexico and other countries, and trade frictions escalated

US-Iran military confrontation: Aircraft carrier strike groups are stationed, and the risk of conflict rises to push up oil prices

The government shutdown threatened: Financing negotiations are deadlocked, and BTC has fallen by an average of 16% during government shutdowns in history

Meanwhile, as critical deadlines approach, financing negotiations have reached an impasse, and investors are increasingly factoring in the risk of a U.S. government shutdown in stock prices. If a last-minute agreement cannot be reached, multiple federal agencies may face operational disruptions, leading to delays in payments and reduced transparency in the near-term fiscal situation. Looking at historical data, Bitcoin prices have seen notable declines during the last three government shutdowns, with a drop of up to 16%.

A severe winter storm continues to affect large parts of the United States and Canada, causing power outages, transportation delays, and strained infrastructure. While weather events are rarely the primary catalyst for Bitcoin, they can exacerbate broader risk aversion when superimposed on geopolitical and fiscal pressures. This storm is more like a superposition, reinforcing the market’s defensive sentiment.

ETF funding reversal and retail demand collapse

! [US spot Bitcoin ETF flow] (https://img-cdn.gateio.im/webp-social/moments-87a9b3933a-6e027d5c9f-8b7abd-e2c905.webp)

(Source: CryptoQuant)

One of the most significant structural shifts is manifested in the flow of funds for spot Bitcoin ETFs in the United States. So far this year, ETFs have sold a net of about 4,600 Bitcoins, compared to a net inflow of nearly 4M Bitcoins in the same period last year. This change is significant because ETFs have been the most stable source of spot demand during this cycle. When buying weakens, it is difficult for the upward market to maintain momentum, and the downward trend will be more intense as fewer buyers enter to absorb supply.

On-chain data shows that trading volume between $0 and $1M has shrunk sharply in retail demand over the past month. This not only indicates a slowdown in the accumulation of funds but also a decline in participation among small investors. The market can tolerate a temporary absence from retail, but a long-term contraction will remove an important stabilizing force. Coupled with ETF outflows, the market is increasingly reliant on short-term traders and leverage, both of which can increase volatility.

Bitcoin’s intraday chart shows that the price continues to fall, followed by a sharp decline in late trading. The lack of a strong rally suggests that the decline was not driven by voluntary selling but was more influenced by forced position adjustments, such as forced liquidations and stop-loss triggers. This price action usually occurs when liquidity is insufficient to absorb sudden selling pressure. On January 29, Bitcoin suffered over $4.6M in liquidations, and liquidations of this magnitude further exacerbated the downward momentum.

$83,000 support is the life-and-death line of the long-short battle

! [Bitcoin 4-hour chart] (https://img-cdn.gateio.im/webp-social/moments-87a9b3933a-fd1456210f-8b7abd-e2c905.webp)

(Source: Trading View)

The outlook for Bitcoin remains bearish, with the price trading around $83,800. After breaking below the clear descending channel on the 4-hour chart, the pullback continued. Since approaching a high of $97,500 in January, Bitcoin has fallen to a demand zone between $84,000 and $85,500, which was also the area where it consolidated in late December.

Momentum remains weak. Bitcoin continues to hit new lows, subject to the downward trendline. The recent flurry of strong red candlestick patterns resembles three crows, indicating persistent selling pressure. The price is also hovering below the 50-period and 100-period EMAs around $89,500 to $90,500, limiting any room for a rebound.

However, the downward momentum may be waning. The RSI indicator is currently around 20, heavily oversold, and usually appears before price stability. The long lower wick appearing around $83,300 to $83,800 suggests that some buyers are entering these levels. If Bitcoin price holds above $83,000, a rally to $86,100 and $88,400 is possible. If it falls below $83,000, the price could drop to $81,600 and possibly even $79,800.

Despite the sell-off, Bitcoin’s losing supply remains relatively low by historical standards. This means that most holders are still holding on to unrealized gains, a situation that often signals further price declines rather than bottoming out. When the price falls to a region where increased supply is causing losses, selling pressure can intensify as market sentiment shifts and risk tolerance tightens.

The data shows that macro shocks do not appear to have created new weaknesses, but rather expose the structural vulnerabilities that are accumulating beneath the surface. If demand conditions remain unchanged, the price of Bitcoin may continue to fluctuate and the rebound will be weak. Any rally would require increased ETF inflows or stable retail demand to sustain upward momentum.