Bitcoin erased all of its gains from 2026 on Wednesday, falling by about 4% over 24 hours to around $88,850 during morning trading in Asia, a level almost identical to that at which the cryptocurrency had closed 2025, after President Donald Trump sought to acquire Greenland and threatened new tariffs on European allies, which rattled global markets.
What happened: a three-week rally erased
The massive sell-off occurred after Trump's geopolitical maneuvers caused the major U.S. stock indices to drop by more than 2% on January 21.
Trump stated on Saturday that he would impose a 10% tariff starting February 1 on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland until reaching a "complete and total purchase of Greenland."
The levies would rise to 25% by June 1 if no agreement materializes, marking a clear escalation of tensions with NATO allies.
The VIX has reached its highest level since November. The dollar has weakened against most major currencies.
Bitcoin briefly surpassed $97,000 earlier in January following a report from the Bureau of Labor Statistics showing price stabilization.
The cryptocurrency is now attempting to recover after hitting a session low of 87,901.
Shiyan Cao of the hedge fund Winshore Capital stated to Bloomberg that the situation "has opened a tail risk — that people may no longer want American assets," adding that investors now need to factor in a political risk premium.
Read also: The One Signal Everyone Missed Before Bitcoin Crashed And Wiped Out Nearly $1B
Why it matters: volatility ahead
The sale has rekindled fears from April 2025, when the announcement of widespread tariffs by Trump triggered a sharp drop in U.S. markets and a surge in volatility.
Even more turbulence looms on Wednesday, when the Supreme Court will hear arguments regarding Trump's attempt to dismiss Federal Reserve Governor Lisa Cook.
An agreement could eventually defuse the tension surrounding Greenland, but it could take months. For now, Bitcoin appears to be stabilizing above $89,000, while traders assess whether this is a buying opportunity or the start of a deeper correction.
For example, Strategy continues an aggressive accumulation of Bitcoin with a recent massive purchase, bringing its holdings to over 3% of the total supply.
Michael Saylor's company acquired 22,305 BTC for approximately $2.13 billion at an average price of $95,284 per coin.
As of January 20, the total holdings of Strategy reached 709,715 bitcoins, valued at approximately $53.92 billion, with an average acquisition cost of $75,979 per coin.
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