Europe Reacts to Trump’s Tariffs as Crypto Crashes: $875 Million Gone

TLDR

• President Trump announced tariffs on eight European nations, escalating tensions and triggering a market reaction.
• The crypto market saw $875 million in liquidations within 24 hours following the tariff announcement.
• Bitcoin’s price dropped 3% to $92,000 as traders sought to reduce risk exposure during volatile market conditions.
• Long positions accounted for 90% of the liquidations, with major exchanges like Bybit and Binance impacted.
• European leaders quickly condemned the tariffs, with some threatening retaliatory measures against the US.

The announcement by President Donald Trump to impose escalating tariffs on eight European nations caused a crypto crash, resulting in $875 million in liquidations within 24 hours. Bitcoin slid 3%, reaching $92,000, as traders rushed to reduce risk exposure. The sudden tariff shock spooked global markets, leading to significant market volatility during the holiday trading period.

Tariff Announcement Shakes Global Markets

On January 19, President Trump revealed via Truth Social that Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland would face 10% tariffs starting February 1. The tariffs will rise to 25% by June 1 unless a deal is reached for the complete purchase of Greenland. European leaders swiftly condemned the move, with French President Emmanuel Macron calling for the activation of the EU’s “trade bazooka” in retaliation.

The US stock market also reacted negatively to the news, with futures for the S&P 500 and Nasdaq falling by 0.7% and 1%, respectively. The broader European equity futures dropped 1.1%, indicating a widespread risk-off sentiment. Gold surged 1.5%, reaching record highs, as investors sought safety in the precious metal. Meanwhile, the US dollar weakened by 0.3% against the Japanese yen.

Crypto Crash Triggers Massive Liquidations

As news of the tariffs broke, the crypto market saw massive liquidations, with $875 million wiped out within a single day. The majority of the liquidations came from long positions, with $788 million in liquidations compared to $83 million from short positions. The forced closures occurred mostly on leveraged crypto exchanges like Hyperliquid, Bybit, and Binance, where long positions accounted for over 90% of liquidated positions.

Bitcoin futures open interest, which had seen a 13% recovery from early January lows, now faces renewed pressure. Analysts pointed out that the massive unwinding of leveraged positions could lead to stronger support for future rallies, despite the immediate shock. CryptoQuant analyst Darkfost stated, “Open interest is showing signs of gradual recovery, suggesting a slow return of risk appetite,” but the tariff news threatens to reverse this momentum.

European Leaders React to Tariff Threat

European leaders quickly unified in opposition to the tariffs, with UK Prime Minister Keir Starmer labeling the move “completely wrong.” Swedish Prime Minister Ulf Kristersson emphasized that Sweden would not be “blackmailed” by the US. Spain’s Prime Minister Pedro Sanchez warned that a US invasion of Greenland could escalate tensions with Russia, potentially undermining NATO.

In response, the European Parliament moved to delay ratification of the EU-US trade deal from July 2025, with German MEP Manfred Weber declaring that the agreement’s 0% tariffs on US products should be put on hold. France, in turn, pushed for the activation of the anti-coercion mechanism to restrict US trade access. This escalating diplomatic standoff could have far-reaching consequences for both the global economy and the crypto market.

The geopolitical tensions continue to evolve as both the US and Europe face off over trade and territory. However, for now, the crypto crash and its impact on global markets remain at the forefront of investor concerns.

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