In the early hours of January 22 Beijing time, US President Trump announced on social media that, following progress in talks with the NATO Secretary General, he would not implement the tariffs originally scheduled to take effect on February 1 against eight European countries, including Denmark. The financial market turmoil triggered by the so-called "Greenland tariff threat" wiped out nearly $1.3 trillion in global risk asset value within just a few days.
Market Turbulence
Global financial markets experienced intense volatility on January 20, 2026. The US market saw a simultaneous sell-off in stocks, bonds, and the dollar. The S&P 500 plunged 2.1%, the VIX volatility index surged to its highest level since November of last year, and long-term US Treasury yields hit new highs not seen since early September. The US Dollar Index also dropped 0.51% in a single day.
This storm was not limited to the United States. Europe’s three major stock indices and leading Asia-Pacific indices mostly closed lower, signaling a renewed wave of "selling America." The global bond market also faced a sell-off, with risk appetite plummeting and capital flowing rapidly into traditional safe havens like gold.
The Core of the Volatility
The main catalyst for this market upheaval is widely seen as escalating geopolitical tensions and tariff concerns. Around January 18, the Trump administration threatened to impose tariffs on Denmark and other European nations unless they agreed to US claims over Greenland.
However, deeper and interconnected financial factors also played a role. Many analysts identified historic volatility in Japan’s bond market as another "eye of the storm." On January 20, yields on Japan’s 40-year government bonds hit the psychologically key 4% mark—the first time in over three decades that Japanese sovereign bonds entered the "4% era." The surge in long-term Japanese bond yields could trigger massive unwinding of global carry trades, setting off a chain reaction that further strained global market liquidity and volatility.
Crypto Market Drops in Tandem
As traditional risk assets were sold off, the cryptocurrency market was not spared, experiencing a significant correlated decline. According to market data, the total global crypto market cap fell by about 3% on January 20 alone.
Amid this sweeping "risk-off" sentiment, Bitcoin briefly dropped below the $88,000 mark. Gate’s market data shows that as of January 22, 2026, the price of Bitcoin (BTC) had rebounded to $89,948.3, up 0.99% in the past 24 hours, with a market cap of $1.79 trillion. Ethereum (ETH) saw an even steeper drop during the turmoil; according to Gate’s latest data, ETH is now trading at $3,019.12, up 1.87% in 24 hours, with a market cap of roughly $365.15 billion.
The sharp market swings triggered widespread liquidation of highly leveraged positions. Over the past 48 hours, total crypto market liquidations exceeded $1.8 billion, with about 93% coming from bullish long positions.
Safe-Haven Assets and Market Divergence
As risk assets tumbled, traditional safe haven gold saw prices surge. On January 21, spot gold prices broke above $4,880 per ounce for the first time, setting a new all-time high. On January 22, gold prices edged back to $4,793.29 per ounce.
This market behavior sparked a key debate: Has Bitcoin’s "digital gold" narrative failed in the short term? Looking at price correlations, Bitcoin’s recent movements have aligned more closely with US equities and other risk assets than with gold.
Signs of divergence also emerged within the market. Despite overall capital outflows, the US spot Ethereum ETF recorded several consecutive days of net inflows in mid-January, while Bitcoin ETFs saw net outflows. This suggests some investors may be rebalancing positions during the market correction, rather than fully exiting the crypto space.
Outlook
With Trump’s announcement to delay the tariff hikes, market tensions have eased somewhat—but the volatility is far from over.
In the short term, market sentiment remains fragile. Any news on negotiation progress or geopolitical developments could spark fresh volatility. Analysts broadly advise investors to watch several key signals: potential EU countermeasures, subsequent US trade policy moves, and developments in Japan’s fiscal and monetary policy.
For the crypto market, some analytical models offer a technical perspective. Machine learning models evaluating multiple indicators predict that Bitcoin prices could rebound to around $94,500 near January 31. However, a report from Citigroup offers a more cautious outlook for Ethereum, projecting its price could fall to $4,300 by the end of 2026 under baseline scenarios.
As of January 22, gold remains at a historic high above $4,793.29 per ounce, while Bitcoin is quoted at $89,948.3 and Ethereum at $3,019.12 on Gate Exchange. The market is holding its breath for the next move. Trump has described the Greenland agreement framework as "a concept for a deal," hinting at possible US interests in local mineral rights and missile defense cooperation. This episode clearly illustrates the vulnerability and high interconnection of all risk assets in a world where global macro politics and complex financial liquidity are deeply intertwined. Whether stocks, bonds, or cryptocurrencies, few can remain untouched amid the sweeping tide of risk aversion.
