Global markets evaporate $1.3 trillion: How Trump's tariff threats trigger chain reactions in cryptocurrency volatility

Beijing Time January 22 early morning, U.S. President Trump announced on social media that, based on progress made in talks with NATO Secretary General, the planned tariffs targeting eight European countries including Denmark, which were set to take effect on February 1, will not be implemented. This financial market震荡 triggered by the “Greenland tariff threat” caused global risk asset market capitalization to evaporate by approximately $1.3 trillion within just a few days.

Market Volatility

On January 20, 2026, the global financial markets experienced intense震荡. The U.S. markets saw a “triple kill” of stocks, bonds, and currencies. The S&P 500 index fell 2.1%, the VIX恐慌指数 jumped to its highest level since November last year; long-term U.S. Treasury yields hit a new high since early September last year; the U.S. dollar index also dropped 0.51% in a single day.

This storm was not limited to the United States. Major European stock indices and key Asia-Pacific indices generally declined, and a “sell-off of U.S.” trading pattern seems to be resurging. The global bond market also experienced a sell-off, with market risk appetite sharply declining, and funds rapidly flowing into traditional safe-haven assets like gold.

Core of the震荡

The core catalyst of this market震荡 is widely believed to be geopolitical tensions and tariff concerns. Around January 18, the Trump administration提出了对丹麦等欧洲国家加征关税的威胁，除非这些国家同意美国对格陵兰岛的主张。

However, there are deeper and interconnected financial factors behind this震荡. The historic volatility in the Japanese bond market is seen by many analysts as another “storm eye.” On January 20, the yield on Japan’s 40-year government bonds reached the psychological threshold of 4%, marking the first time in over thirty years that Japan’s sovereign bonds entered the “4 era.” The surge in long-term Japanese bond yields could lead to large-scale unwinding of global carry trades, triggering chain reactions and exacerbating liquidity tensions and volatility in global markets.

Crypto Market Linkage Decline

Alongside the sell-off of traditional risk assets, the cryptocurrency market also experienced significant联动下跌. According to market data, on January 20, the total global cryptocurrency market cap declined by about 3% in a single day.

Amid this widespread “risk aversion” sentiment, Bitcoin once fell below the $88,000 mark. According to Gate行情数据显示, as of January 22, 2026, Bitcoin (BTC) price has rebounded to $89,948.3, up 0.99% in the past 24 hours, with a market cap of $1.79 trillion. Ethereum (ETH), which initially declined more than Bitcoin during the震荡, is now quoted at $3,019.12, up 1.87% in 24 hours, with a market cap of approximately $365.15 billion.

The intense market震荡 triggered liquidations of high leverage positions. Over the past 48 hours, the total crypto liquidation amount exceeded $1.8 billion, with about 93% of these being long positions.

Safe-Haven Assets and Divergence

When risk assets broadly decline, traditional safe-haven assets like gold surge. On January 21, spot gold prices broke through $4,880 per ounce for the first time in history. On January 22, gold prices slightly retreated to $4,793.29.

This market behavior has sparked a key discussion: Is the “digital gold” narrative of Bitcoin invalid in the short term? From the price correlation perspective, Bitcoin’s recent movements are more synchronized with risk assets like U.S. stocks rather than with gold.

Internal market signs of divergence also appeared. Despite overall capital outflows, U.S. spot Ethereum ETFs recorded net inflows for several consecutive days in mid-January, while Bitcoin ETFs showed net outflows. This suggests some investors may be rebalancing their positions during the market adjustment rather than completely退出加密货币市场。

Future Outlook

With Trump announcing a delay in tariffs, market nerves have been somewhat eased. But this does not mean the volatility has ended.

In the short term, market sentiment remains fragile, and any news about negotiations or geopolitical developments could trigger new震荡. Analysts generally advise investors to closely monitor several key signals: potential EU countermeasures, subsequent U.S. trade policy developments, and Japan’s fiscal and monetary policy updates.

For the cryptocurrency market, some models provide technical perspectives. Machine learning models, after evaluating multiple indicators, predict that Bitcoin may rebound to around $94,500 before January 31. However, a report from Citigroup offers a more cautious outlook for Ethereum, suggesting that under baseline scenarios, its price could fall to $4,300 by the end of 2026.

As of January 22, gold prices remain above the historic high of $4,793.29 per ounce, while Bitcoin is quoted at $89,948.3 on Gate exchange, and Ethereum at $3,019.12. The market is waiting in suspense for the next developments. Trump has described the Greenland agreement framework as “a concept of a deal,” hinting it may involve U.S. mineral rights and missile defense cooperation. This incident clearly reveals the fragility and high interconnectedness of all risk assets amid the complex interplay of global macro politics and financial liquidity. Whether stocks, bonds, or cryptocurrencies, none can fully remain unaffected in the sweeping wave of “safe-haven” flows.