Level 2, ‘The Fort’, HardRocks Business Park, Burmarrad Road, Naxxar, NXR 6345
Crypto Casino is an independent platform providing unbiased information about online crypto casinos, games, and bonuses. We are not owned or operated by any gambling provider. All reviews, rankings, and guides are written by our expert team based on honest analysis and the latest available data.
Copyright©Crypto.Casino Ltd. 2026. All Rights Reserved
President Donald Trump's tariffs in headline news have set off a chain reaction causing a downturn in crypto markets.
Jan 23, 2026
Written January 20, 2026
In current crypto news, traders and investors are facing more losses this week after US President Donald Trump indicated he would raise tariffs on 8 European countries associated with the Greenland dispute. This has led to broader markets pulling back on risk, with both US and European markets experiencing dips and falls to varying levels. As of now, major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) are facing downward shifts.
Donald Trump's proposed tariffs have escalated geopolitical tension, causing investors to sell off crypto and other high risk assets.
The initial sell off has been turned into a crypto crash strengthened by leverage unwinding and changing expectations for Federal Reserve rate cuts, while financial institutions appear to be cautious
Looking for ETF flows, further volatility, liquidity movements, and macro headlines will be key to monitoring the situation.
The morning of January 19 saw crypto prices fall across the markets now leading into Tuesday. After a previous rally, Bitcoin (BTC) dropped by 3.26% settling just under $89,600, and Ethereum (ETH) dropped by 6.06% to around $2,993 at the time of writing (15:30 CST). Monero (XMR) took a larger hit, falling down by 17%.
The sell off occurred after US President Donald Trump announced he would raise tariffs by 10% for 8 European countries as a response to their opposition against the US’ control over Greenland. Trump’s threat to raise tariffs starting February seems to be an act of political leverage, targeting the United Kingdom, France, Norway, Denmark, Germany, Sweden, Finland, and the Netherlands. The president stated the tariffs would rise even further to 25% by June if a deal wasn’t in place, indicating that he’s in it for the long term.
Only a day later, the EU is weighing options to prevent Trump’s tariffs and is set to discuss raising retaliatory tariffs in Brussels Thursday, January 22. The plan would potentially include a package of tariffs on $107 billion dollars worth of US imports that could come into effect on February 6th. The EU could also implement "Anti-Coercion Instrument” (ACI), which would provide a pathway to respond to tariffs if the EU concludes it is facing economic coercion.
The crypto markets responded swiftly as the announcement led to early selling and price drops. Then around $875 million in derivatives were liquidated (forcibly closed) in the 24 hours that followed, according to Yahoo Finance.
The possibility of more and longer tariffs is stirring traditional markets as stocks fell across American and European markets.
Less volatile assets, like gold and silver, saw an uptick in demand, suggesting that investors are retreating from risk and volatility, especially with assets like crypto.
Crypto’s downturn appears to be a macro level risk off move from markets that affected digital assets, the resulting leverage and liquidations exacerbating the initial price falls. In addition, data on ETF flows indicates demand has not been high enough to absorb volatility, as crypto ETFs saw a number of outflows in December. This only highlights how investors had already been reducing exposure to crypto in their portfolio in the lead up to the headlines.
The crash started as markets moved to “risk-off” behavior in their trading after the initial tariff announcements.
Risk-off behavior is a common occurrence when investors face uncertainty about macroeconomic or geopolitical factors and news. During periods of risk-off, traders liquidate volatile assets, like crypto, to reduce exposure while moving to traditionally safer positions, which can affect prices even if not related to crypto.
As the proposed American purchase of Greenland is reaching new levels of conflict, investors
and the market began to react in panic and shift their portfolios. Potential trade issues in the near future only means uncertainty at best for investors.
With the fall of markets, increase in volatility, and crypto being liquidated through forced closure, there’s plenty to indicate investors are steering towards risk-averse behavior. Precious metals are trading at record highs and global equity is falling.
Even if headlines aren’t actually related to crypto, their high risk status as an asset can cause price drops under the right conditions, especially since they are typically one of the first to be cut from portfolios.
The initial price drop stemmed from investors deciding to reduce exposure early through discretionary selling. When price drops followed, exchanges forcefully closed more positions as some long term leverages hit maintenance margin thresholds, increasing downward pressure further, leading to exchanges liquidating crypto. In effect, the initial sell off caused a feedback loop as positions were automatically sold in an already falling market.
The feedback loop only grew stronger after early closures, Hence the reported $875 million liquidation that followed. It’s best to think of this number as a signal, not a cause, of the crash, since it really just indicates how much leverage was being pulled out during the crash.
Fund flows can help indicate whether risk is going to be added or reduced by institutions and market makers. Specifically, they track capital being put in or pulled out of crypto investments over a period of time. Just keep in mind that it is more useful as a measure for market conditions than whether an asset performed well or not.
When flows turn negative, it can suggest that investors are reducing exposure during risk off markets.
Flows are not the same as trading volume, which only measures how many ETF shares were actually traded in a day. Flows represent creations and redemptions on the primary market, handled by authorized participants acting as financial intermediaries. New ETF shares are created when demand from investors is high and are redeemed when the demand is low. In effect the ETF price is better aligned with the value of multiple assets it holds.
The distinction is important to remember because crypto ETP (Exchange Traded Products) tend to be affected by whether the creation/redemption occurs in cash or in-kind (exchanging for other assets. In July of 2025, The SEC allowed for authorized participants to conduct in-kind creation and redemptions for crypto ETPs, which were previously limited to cash only, in an effort to increase market and trading efficiency.
Crypto’s ability to be traded 24/7 as opposed to traditional markets, brings a reduction in liquidity and increase in volatility, meaning price drops can affect the market faster, and maintenance margin thresholds become more likely to occur.
Some investors anticipated changing market sentiments to risk off as a reported $454 million dollars worth of digital investments in outflows was reported the previous week per CoinShares. They also note that some crypto assets, like Solana and XRP, saw inflow, while major cryptocurrencies Bitcoin and Ethereum made up the overwhelming majority of the outflow. This was largely in part due to traders and institutions lowering their expectation for a rate cut by the Federal Reserve that is supposed to take place this month. The Reserve is now expected to keep current interest rates to manage the job market slowdown and inflation simultaneously.
Outflows can affect an asset’s market price, and it did so here for crypto. The rise in uncertainty, even due to headlines, means there’s less buyers for dips, creating an opportunity for liquidation to continue further.
Flows only help tell the more recent developments in this crash, which is why it’s important to keep in mind that headline news and shifts in leverage initiated the early stages.
This situation is still developing, but there are some important signals in headlines and markets to look out for.
When deadlines for policy come closer, markets have a tendency to reprice risk. New developments can change outlooks for the future. Headlines have powerful effects, if this week’s events are anything to go by.
The EU has a few options to respond to Trump’s tariffs, including raising their own and employing the ACI. While it is not an outright ban on foreign trading, it does give the Union measures to counteract tariffs.
These can be good measurements to understand how financial institutions are looking at risk involved with crypto. Monitoring creation and redemption numbers will give a better picture of how cryptocurrencies and other crypto assets are being assessed for risk by investors and financial institutions.
If crypto assets continue to be liquidated on a large scale, leverage is likely still in the process of being sold off. On the other hand, liquidation slowing down while prices stabilize can indicate forced selling is dissipating.
NOTE - The content in this article is not to be considered or read as financial advice. This article is purely for informational purposes only. Consult a professional financial advisor before taking any actions.
