Global cryptocurrency markets experienced a sharp downturn, with Bitcoin (BTC) erasing all its gains for the year 2026 after a week-long selloff. The leading digital asset fell another 4% on Tuesday, January 21, dropping to $87,790 on Coinbase—its lowest level since December 31. Over a 48-hour period, more than $1.8 billion in leveraged crypto positions were liquidated, with approximately 93% of those being long bets.
The broader crypto market capitalization collectively shed $225 billion, marking the largest decline since mid-November and bringing the total market cap to $3.08 trillion. Bitcoin itself is now down 10% from its year-to-date high of just under $98,000 and has fallen below its 50-day exponential moving average, a key technical support level during its recent rally.
The selloff was triggered by a confluence of global macroeconomic fears. U.S. President Donald Trump's announcement of plans to impose 10% tariffs on eight European nations, coupled with threats of 200% tariffs on French goods, reignited trade war anxieties and prompted a "Sell America" trade. This geopolitical uncertainty was compounded by a dramatic blowout in the Japanese government bond (JGB) market, where 10-year yields surged almost 19 basis points in two days.
Financial leaders pointed to the JGB turmoil as a primary catalyst. Dan Tapiero, Founder and CEO of 50T Funds, described a "complete annihilation in Japanese bond markets infecting all markets right now." U.S. Treasury Secretary Scott Bessent echoed this, stating the market decline had "nothing to do with Greenland" and was instead due to a "six-standard-deviation move" in Japanese bonds. Analysts warn this threatens to unwind critical carry trades, tightening global liquidity.
Jeff Ko, chief analyst at CoinEx Research, noted Bitcoin is caught in a "tug-of-war," sharing characteristics with hard assets like gold but currently being sold off due to its high sensitivity to tightening liquidity conditions. The vulnerability was foreshadowed by a Bank of America survey showing fund manager cash holdings at a record low of 3.2% and bullish sentiment at "hyper-bull" levels, leaving markets exposed to a sudden shift in risk appetite.
