The cryptocurrency market staged a notable rebound on Wednesday, January 21, 2026, led by Bitcoin (BTC) and Ethereum (ETH), following an announcement from U.S. President Donald Trump that defused a looming trade conflict. The immediate catalyst was a post by Trump on his Truth Social platform, where he stated, "We have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region. This solution, if consummated, will be a great one for the United States of America, and all NATO Nations. Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st."
This announcement directly reversed a scheduled tariff threat against eight European countries, which had been a source of significant macroeconomic uncertainty and had weighed on both crypto and traditional markets. Bitcoin, which had traded as low as $87,207 earlier in the day, surged above $91,000 following the news. The total cryptocurrency market capitalization increased by approximately 1% to around $3.05 trillion. Ethereum reclaimed the psychologically important $3,000 level, rising about 1.28% on the day.
The market movement was attributed by traders to the "TACO" (Trump Always Chickens Out) narrative, a pattern observed during previous tariff disputes in 2025. The relief rally extended beyond crypto, with U.S. stock indices also surging. This came after a period of pressure, as evidenced by a combined net outflow of roughly $713 million from U.S. spot Bitcoin and Ether ETFs on Tuesday and a 2.1% drop in the S&P 500.
Despite the rebound, analysts cautioned that Bitcoin's technical outlook remained cautious. The price was noted to be forming a bearish continuation flag pattern on daily charts, with a potential mid-term target near $80,000. The volatile price action also triggered significant liquidations in derivatives markets, with over $1 billion in long and short positions liquidated over 24 hours, including $275.82 million in short liquidations within a four-hour window around the rally.
Other major altcoins like XRP and Cardano's ADA saw more pronounced gains of over 4%, while crypto-related equities such as BitMine also rebounded. The event highlighted the crypto market's continued sensitivity to geopolitical developments and macroeconomic policy signals from the U.S. administration.
