Quick take
Bitcoin and the broader crypto market slid sharply on Sunday as renewed fears of a U.S.–EU trade war rattled investor confidence. The sell-off added pressure to an already fragile market, which has been struggling with weak sentiment and regulatory uncertainty in the United States.
Crypto market hit by sudden sell-off
Bitcoin, Ethereum and other major cryptocurrencies experienced a sudden downturn as geopolitical tensions resurfaced. According to market data, bitcoin dropped from around $95,500 at 5 p.m. ET to $92,474 by 9 p.m., marking a roughly 3% decline in just a few hours. Ethereum, XRP and Solana closely followed bitcoin’s move, reinforcing the broader crypto market weakness.
The sharp price drop triggered heavy liquidations. More than $750 million in leveraged long positions were wiped out within four hours, based on Coinglass data compiled from publicly available sources. Analysts pointed to escalating concerns over a potential U.S.–EU tariff war as the main catalyst behind the sudden volatility.
Trade war fears weigh on sentiment
Market anxiety intensified after renewed headlines suggested the risk of a full-scale trade conflict between the United States and the European Union. According to a report by Reuters, U.S. President Donald Trump threatened to impose escalating tariffs on imports from several NATO countries unless Denmark agrees to sell Greenland to the United States. Proposed tariffs would reportedly start at 10% in February and rise to as much as 25% by June.
European leaders strongly criticized the proposal, calling it “blackmail” and warning that it could trigger a dangerous escalation in transatlantic relations. EU officials are now said to be considering retaliatory steps, including restrictions on U.S. services in Europe, new taxes on American companies and limits on investment.
Crypto lags other risk assets
Despite the geopolitical shock, crypto markets appear to be underperforming compared with other risk assets. Min Jung, associate researcher at Presto Research, noted that while U.S.–EU trade war concerns hit sentiment, several traditional markets were trading flat or higher.
According to Jung, this divergence suggests crypto-specific weakness rather than a broad-based risk-off move. Investors, for now, seem to be favoring other asset classes while cryptocurrencies continue to lag.
Regulatory delays add pressure
Analysts also stressed that the latest headlines are not the sole reason behind the pullback. Rachael Lucas, crypto analyst at BTC Markets, said market sentiment had already been deteriorating after delays to the U.S. crypto market structure bill.
Momentum weakened further after Coinbase withdrew its support for the legislation, prompting the Senate Banking Committee to postpone its markup hearing with no new date announced. This regulatory uncertainty has continued to weigh on investor confidence.
Bitcoin outlook amid macro pressure
Lucas also highlighted technical and flow-related factors. Bitcoin has been consolidating for months following its October 2025 all-time high near $126,000, with traders steadily taking profits. A recent break below the 50-week moving average triggered algorithmic selling, while spot Bitcoin ETFs reportedly saw $4.4 billion in outflows across November and December. Futures open interest also declined sharply, signaling reduced risk appetite.
If macro pressures persist, Lucas warned that bitcoin could revisit the $67,000–$74,000 range. However, she emphasized that the current environment does not resemble previous crypto winters, noting that the industry is more mature and continues to benefit from longer-term, constructive regulatory signals.
For now, heightened geopolitical uncertainty and stalled U.S. regulation remain key factors shaping bitcoin price action and overall crypto market sentiment.
