On a turbulent Tuesday, the financial markets across both digital and traditional assets took a notable hit, reacting sharply to aggressive tariff statements issued by U.S. President Donald Trump concerning Greenland. This development spooked risk-on investors, causing a broad sell-off spanning major cryptocurrencies and stock indices.
Decline in Cryptocurrency Prices
Leading digital currencies experienced marked declines as Bitcoin (BTC) dipped almost 4%, falling below the $88,000 threshold, a psychologically significant mark. Trading volume accompanied this drop, surging 76% within 24 hours, signaling heightened investor activity amid the downturn.
Ethereum (ETH) endured an even steeper decline, shedding almost 7%, as its price slipped below $3,000 for the first time in three weeks, a notable resistance level for the asset. Similarly, XRP and Dogecoin (DOGE) sustained losses around 3.4% and 2.2% respectively. Solana (SOL) also retraced, falling by 4.57% to approximately $127.
Impact on Crypto-Related Equities and Market Capitalization
Downturns in the cryptocurrency sector extended into publicly traded companies with interests in crypto markets. Shares of Strategy Inc. (NASDAQ:MSTR) dropped 7.76%, while Coinbase Global Inc. (NASDAQ:COIN) saw its stock price decrease by 5.57%. Overall, the cryptocurrency market capitalization contracted by 4%, descending to a total valuation near $3 trillion.
According to the analytics provider Coinglass, over $1.7 billion in positions were liquidated over the prior 24-hour period, including approximately $1 billion originating from leveraged long positions. This mass liquidation coincided with a 1.22% decline in Bitcoin open interest and a 3.22% reduction in Ethereum futures contracts locked in.
These metrics collectively reflect a shift in market psychology. The Crypto Fear & Greed Index registered a move from "Fear" to "Extreme Fear," underscoring the elevated risk aversion permeating the digital asset space.
Selective Resilience Among Smaller Cryptocurrencies
While major coins suffered losses, some altcoins recorded gains during the same window. Axie Infinity (AXS) rose 19.02% to $2.10, River (RIVER) increased by 15.35% to $35.31, and Story (IP) expanded 14.44% to $2.67. These pockets of optimism suggest selective demand for specific projects despite the overall bearish environment.
Equities Retreat on Escalating Trade Frictions
The stock markets echoed the broader risk-off sentiment, enduring their worst daily losses in over three months. The Dow Jones Industrial Average dropped 870.74 points, equivalent to 1.76%, closing at 48,488.59. Concurrently, the S&P 500 index declined 2.06% to 6,796.86 while the Nasdaq Composite retreated 2.39%, settling at 22,954.32.
These downturns prompted investors to seek safe havens. Gold spot prices advanced 0.48%, reaching an all-time high of $4,785 per ounce, traditionally viewed as a store of value amid uncertainty.
The current market nervousness was exacerbated by President Trump’s reiteration of tariff threats directed at Europe contingent upon their position regarding the U.S. attempt to acquire Greenland. The President emphasized a firm stance, declaring "there can be no going back" on the issue given the island’s strategic importance for national and global security considerations.
On-Chain Data and Analyst Perspectives Suggest Positive Underpinnings
Despite prevailing downward pressure, on-chain analytics indicate ongoing accumulation by significant Bitcoin holders. Data from Santiment shows addresses controlling between 10 and 10,000 BTC have increased their holdings by 36,322 tokens over the preceding nine days, reflecting a net rise of 0.27%.
Santiment interprets these dynamics as potentially "optimal conditions for a crypto breakout," characterized by the divergence between smart money accumulation and retail investor selling. Excluding geopolitical variables, this trend aligns with patterns often preceding long-term bullish reversals.
Ethereum has also attracted attention due to concentrated on-chain activity between $2,772 and $3,119 price levels, identified as a critical support zone by Michaël van de Poppe, a noted cryptocurrency analyst and trader.
Photo: KateStock / Shutterstock
Summary
The convergence of worsening trade tensions and tariff threats from the U.S. government triggered significant sell-offs across cryptocurrencies and traditional equities. Key digital assets such as Bitcoin and Ethereum experienced steep price drops alongside the broad market retreats. Liquidity evaporations in leveraged positions contributed to heightened volatility and amplified risk-off sentiment as signaled by the Crypto Fear & Greed Index's shift to extreme fear. Nevertheless, on-chain data reflects continued Bitcoin accumulation by substantial holders, suggesting a base for possible future price resilience. Observers highlight crucial support levels within Ethereum’s trading range, providing focal points for monitoring potential market stabilization.