Cryptocurrency market suffers massive shock after escalation of trade war

The cryptocurrency market plunged into turbulent waters on Thursday after tensions between the US and Europe dramatically increased. Last night, Bitcoin, Ethereum, and all altcoins suffered significant losses, erasing much of the positive gains from the previous week. The turbulence was triggered by renewed threats from US President Donald Trump regarding a possible annexation of Greenland, igniting a serious trade war between the two economic blocs.

Trump’s Greenland ambitions ignite geopolitical tensions

The crisis began last Saturday when Trump employed his classic tactic and threatened eight European countries, including the Netherlands, with high import tariffs. These are set to take effect on February 1 and will amount to ten percent for all involved nations participating in a Danish military mission in Greenland. Despite this drastic measure, the European Union responded decisively: yesterday, Brussels announced a countermeasure package worth 93 billion euros.

The confrontation escalated significantly. What started as a diplomatic maneuver developed into a serious crisis with direct impacts on global financial markets. The US stock market remained closed due to Martin Luther King Day, but futures markets opened as usual—and the reaction was clear: screens turned red, and the bloodbath also hit the crypto market with full force.

Massive price drops across the entire crypto market

The effects were immediate and dramatic. In the night to Friday, Bitcoin’s price collapsed from around $95,500 to below $92,000—a decline of nearly 3.7 percent within a few hours. As of now (February 12, 00:04 UTC), Bitcoin is trading at $66,980, with a 24-hour decrease of 2.80 percent. On the European exchange Bitpanda, BTC is traded in euros at approximately €57,300.

The technical outlook further heightens investor concerns. Bitcoin appears to be in a downward channel and could experience further losses in the coming hours, dropping below $65,000. The psychologically important mark of $70,000 is already in question. Many investors’ hopes for a quick breakthrough above $100,000 are thus pushed further into the distance—for now, at least.

Only gold and silver benefit from this uncertainty, as is typical in such market situations. They are traditionally sought after by investors as safe havens.

Altcoins suffer significantly higher losses than Bitcoin

Altcoins are hit especially hard. Ethereum falls by 3.99 percent, which still seems relatively moderate compared to other high-volatility projects. Ripple (XRP) loses 2.49 percent, while Solana drops by 4.41 percent, experiencing much stronger pressure. The biggest loser is Cardano (ADA), with a 24-hour decline of 2.40 percent.

Surprisingly, the development of privacy coin Monero is different. The project, currently the twelfth-largest cryptocurrency by market capitalization, benefits wonderfully from the uncertainty and rises by 6.08 percent. This anomaly may be explained by the fact that investors tend to turn to privacy-focused assets during times of geopolitical instability.

Overall, the crypto market is under significant selling pressure on Friday. Frustration among crypto investors is noticeably growing, while traditional markets are also heavily impacted by the escalation of the trade war. Market observers warn of further escalation of political tensions, which could put additional pressure on the crypto market in the coming days.