The global cryptocurrency market experienced a sudden "flash crash" on Monday morning, as renewed trade tensions between the US and Europe unexpectedly flared up again, increasing risk aversion in financial markets.
Specifically, on January 19th, the price of Bitcoin plummeted sharply in less than an hour. The largest cryptocurrency by market capitalization fell by approximately 3.8%, from around $95,500 to a low of around $91,900 before rebounding slightly to the $92,800 area. The decline was so rapid that many highly leveraged positions on Derivative exchanges were liquidated en masse, further amplifying the volatility. Some Medium and small- Capital altcoins even recorded deeper declines than Bitcoin, reflecting short-term investor panic.
Meanwhile, Futures Contract for the US Nasdaq, S&P 500 , and Dow indices all fell by about 1%, indicating a withdrawal of funds from risky assets in favor of safer havens amid policy uncertainty. Euro Stoxx 50 Futures Contract also dropped by about 1%, while German DAX Futures Contract fell even more sharply, by approximately 1.1%.
In contrast to the performance of the cryptocurrency and stock markets, safe-haven assets surged. Spot gold and silver prices both jumped at the start of the week's trading session, reaching new record highs.
The main reason for the rapid decline in stocks and cryptocurrencies stems from Trump's tariff moves. Last weekend, US President Donald Trump unexpectedly announced a 10% tariff on eight European countries that did not support the US annexation of Greenland, an autonomous territory of Denmark. This move immediately raised concerns about a new round of escalating trade tensions between the US and Europe, in the context of Capital sensitive transatlantic economic relations.
