Why Crypto Market Is Down: Geopolitical Shocks and Forced Unwinds Trigger Massive Selloff

Monday’s crypto landscape painted a bearish picture as multiple forces converged to spark a significant market correction. Here’s what moved the needle as of today.

The Catalyst: Trade Tensions Spark Risk-Off Mode

The primary driver behind today’s crypto downturn stems from escalating trade rhetoric between Washington and Europe. The geopolitical tension created an immediate ripple effect across financial markets, with digital assets bearing the brunt of the sell-off. According to derivatives data, approximately US$875 million in leveraged positions were liquidated over a 24-hour period—a substantial outflow that reflected the market’s fragile risk appetite heading into the week.

The proposed tariff framework targeting European nations would begin at 10 percent this February, potentially escalating to 25 percent by June. This uncertainty weighed heavily on sentiment, as thin holiday liquidity amplified the downside moves.

Major Coins Under Pressure

The carnage extended across the entire digital asset spectrum:

• Bitcoin (BTC) retreated to US$89,660, reflecting a 3.64 percent decline over the past 24 hours
• Ethereum (ETH) fell to US$3,000, down 6.63 percent in the same period
• Solana (SOL) dropped to US$127.88, experiencing a 4.90 percent pullback
• XRP declined to US$1.91, off 5.18 percent

The magnitude of decline varied, with alternative assets taking a sharper hit than Bitcoin, suggesting leverage was concentrated in riskier bets.

Liquidation Cascade: When Bullish Bets Turn Sour

The forced liquidations tell an important story. Most unwound positions were bullish bets that got caught off-guard by the sudden policy shift. Thin liquidity conditions exacerbated the selling pressure, creating a cascade effect where stop-losses triggered additional selling.

This pattern is typical during geopolitical shocks—when uncertainty spikes, margin traders face rapid margin calls, forcing exchanges to liquidate collateral at unfavorable prices. The $875 million figure likely represents only a portion of the total impact when accounting for spot market selling.

Corporate Bitcoin Accumulation Continues Amid Volatility

Notably, Michael Saylor’s investment vehicle remains aggressive despite market turbulence. Recent signals suggest additional bitcoin purchases may be imminent following the company’s recent $1.25 billion acquisition. The firm has accumulated nearly 15,000 BTC since the year’s beginning, bringing holdings above 687,000 bitcoin at an average acquisition price near US$75,000.

This institutional buying appetite persists even as retail positions get liquidated, underscoring a divergence in how different investor classes are positioned.

Long-Term Holder Crystallizes Massive Gains

In a separate development highlighting Bitcoin’s transformative potential, a dormant early holder from 2012 resurfaced after more than a decade of silence. The whale liquidated approximately 2,500 BTC above US$100,000, converting an initial investment of just over US$300 per coin into hundreds of millions of dollars—a realized return surpassing 31,000 percent.

Such exits remind the market that early adopters continue to harvest extraordinary gains, though recent sellers may represent meaningful selling pressure.

What’s Next?

The current selloff reflects overlapping pressures: policy uncertainty, margin liquidations, and macro risk-off sentiment. Whether this represents a temporary correction or the beginning of a deeper pullback will depend on how trade tensions evolve and whether additional macroeconomic shocks materialize.