This week has witnessed significant turmoil in both global politics and the cryptocurrency sphere, with Bitcoin bearing the brunt of the fallout. The turbulence began last weekend when eight EU nations deployed troops to Greenland as part of a reconnaissance effort, following comments from President Trump suggesting the US should annex the island. In retaliation, Trump announced a potential 10% tariff on these countries starting February 1 unless they withdrew their forces and allowed negotiations to progress.
The European Union quickly convened an emergency meeting, with speculation that the bloc was ready to employ unprecedented trade measures. As these tensions escalated, Bitcoin, which had been trading above $95,000 over the weekend, began its downward trajectory. By Monday morning, after the opening of Asian markets, Bitcoin fell to $92,000 and subsequently plunged below the critical $90,000 threshold. By Wednesday morning, it dipped below $88,000.
A brief rally occurred when Trump indicated during his speech at Davos that he would refrain from using force regarding Greenland. However, this optimism was short-lived, as Bitcoin soon dropped again to $87,200. The unpredictable price movement continued with another attempt to breach the $90,000 barrier when Trump hinted at possibly rescinding the tariffs against the EU if a deal could be reached. Currently, Bitcoin is trading around $89,200, struggling to reclaim its $90,000 support level, reflecting a 6.5% decline over the past week.
In comparison, other cryptocurrencies like Ethereum (ETH) and Solana (SOL) experienced steeper losses, each suffering around an 11% drop, while XMR saw a dramatic decline of almost 30%. Conversely, some assets like CC and PAXG bucked the trend and ended the week positively.
Market data highlights indicate that the total cryptocurrency market capitalization is approximately $3.1 trillion, with a 24-hour trading volume close to $110 billion. Despite recent setbacks, Bitcoin retains a dominant market share of about 57.5%. Amidst Bitcoin“s struggles, gold surged to unprecedented highs, nearing $5,000 per ounce for the first time, contrasting sharply with Bitcoin“s declines.
In addition, XRP ETFs experienced their largest outflows ever, with approximately $50 million leaving these funds in a single day as Ripple”s price faltered once again on Tuesday. This week also marked one year since Donald Trump”s second inauguration as “crypto president,” during which Bitcoin has seen a decline of around 15%, while altcoins have plunged between 70-90%, highlighting stark differences in investor sentiment throughout his administration.
Ethereum co-founder Vitalik Buterin has announced plans to fully exit centralized social media by 2026, utilizing Firefly, a multi-client platform that supports networks like X and Lens. Meanwhile, Michael Saylor”s strategy company continues its aggressive acquisition of Bitcoin, recently purchasing over 22,305 BTC for approximately $2.1 billion, despite ongoing geopolitical tensions and price stagnation.
This week”s developments also saw Nate Geraci countering Peter Schiff“s claims that Bitcoin is Wall Street”s worst performer by showing that since the launch of ETFs two years ago, Bitcoin has gained more than 90%. As global political dynamics continue to evolve, particularly regarding US-EU relations over Greenland, the effects on cryptocurrencies remain significant yet uncertain until concrete resolutions are established or the markets stabilize under new conditions.
On the trading front, the volatility has caught many investors off guard. The late Friday announcement of new tariff threats by President Trump has heightened market uncertainty. Traders were already anxious with Bitcoin“s precarious position beneath $90,000, and Trump”s statements at Davos introduced further complexity to their assessments. Major exchanges like Binance and Coinbase reported a notable increase in trading activity on January 22, as users rushed to either mitigate losses or seize potential rebound opportunities. According to Binance, trading volumes for Bitcoin surged nearly 30% compared to the previous week. This uptick was partly driven by speculative bets on whether Trump”s softened approach would lead to tangible diplomatic progress or whether it was merely a façade.
The decline of over 11% in Ethereum this week has raised eyebrows among analysts, who observe that recent network upgrades and advancements should ideally offer some price support. On January 21, Ethereum co-creator Joseph Lubin expressed his confusion regarding the market”s reaction, suggesting it seems disconnected from technological fundamentals. “It”s perplexing,” Lubin remarked during a Bloomberg interview, “but it reflects current investor sentiment rather than fundamentals.”
As for altcoins like Solana and Chainlink, which experienced double-digit percentage drops, questions arise about their resilience amid such volatility. Solana Labs CEO Anatoly Yakovenko stated on January 20 that while short-term price fluctuations are concerning, their focus remains on long-term growth and ecosystem development. However, pronounced weekly declines have left investors wary of further downside risks in the near future.
