Crypto markets didn’t ease into the new week—they stumbled out of the gate.
After a quiet, range-bound weekend, a sudden wave of macro uncertainty ripped through digital assets during early Asian trading hours, triggering more than $550 million in liquidations. Leveraged long positions were hit hardest as traders rushed to de-risk amid a growing list of geopolitical, fiscal, and currency concerns.
The message was unmistakable: risk appetite is fading fast.
Bitcoin and Ethereum Slide as Leverage Unwinds
The sell-off caught many traders off guard.
Bitcoin briefly slipped to the $86,000 level before finding tentative support
Ethereum fell toward $2,785, tracking the broader risk-off move
According to market data cited by QCP Asia, the majority of the liquidations came from overleveraged long positions that were forced out as prices dipped below key technical levels.
What made the move stand out was what happened elsewhere.
While crypto stumbled, traditional safe havens surged. Gold and silver extended their recent rally, signaling a clear rotation into lower-risk assets as uncertainty spread across global markets.
The Macro Storm Behind the Move
Traders point to a perfect storm of macro risks that hit markets simultaneously.
1. Tariff Threats Return to Center Stage
Fresh comments from President Donald Trump reignited trade anxiety after he floated the possibility of 100% tariffs on Canadian imports.
Even the hint of such measures was enough to rattle markets already sensitive to geopolitical shocks. For risk assets like crypto, renewed trade tensions tend to translate quickly into reduced exposure.
2. US Government Shutdown Fears Escalate
At home, Washington politics added fuel to the fire.
House Republicans advanced spending bills that include $64.4 billion for border security and the Department of Homeland Security
Senate Democrats have signaled they will block the measures
With current government funding set to expire on January 30, the odds of a partial shutdown are rising fast.
Markets are clearly pricing in that risk. Polymarket odds imply roughly a 75% chance of a shutdown by January 31, a setup that mirrors last autumn’s fiscal standoff—an episode that coincided with a sharp crypto drawdown.
3. Yen Volatility and FX Intervention Anxiety
Currency markets remain another pressure point.
A recent “rate check” on USD/JPY by the New York Fed highlighted growing sensitivity to yen weakness. The 160 level is widely seen as a red line that could trigger coordinated intervention.
Although USD/JPY has pulled back from its highs, it’s still trading near 154, close to two-month peaks. That has prompted traders to unwind short-yen positions rather than risk being caught on the wrong side of sudden policy action.
The result? Less appetite for risk across global markets—including crypto.
Derivatives Markets Turn Defensive
The caution isn’t limited to spot prices. Crypto derivatives are flashing warning signs.
According to QCP:
Implied volatility has risen across option maturities
Put skews have steepened, signaling increased demand for downside protection
Traders are rolling bitcoin downside hedges from $88,000 toward $85,000
In simple terms, the market is paying up for protection—and that’s rarely a bullish short-term signal.
A Crucial Week Ahead for Crypto
This week is packed with potential catalysts.
Major technology earnings could sway broader risk sentiment
A Federal Reserve policy decision looms, with rates expected to remain unchanged
While no immediate rate move is expected, traders will parse every word from Chair Jerome Powell for clues on the Fed’s next steps.
Until there’s clarity—especially around the risk of a US government shutdown—markets may remain stuck in choppy, headline-driven trading.
As QCP summed it up:
“With multiple macro risks unresolved, crypto prices are likely to chop around in the near term.”
For now, leverage is being flushed, hedges are rising, and the market is bracing for more volatility. In crypto, when macro uncertainty takes the wheel, calm rarely lasts long.