Bitcoin Down, Gold Futures Up as Europe Threatens 'Trade Bazooka'

Bitcoin prices fell sharply on January 18, 2026, as U.S. President Donald Trump announced new tariffs targeting eight European countries. The move, tied to Trump's ongoing dispute over Greenland, triggered immediate volatility in cryptocurrency markets, with Bitcoin dropping below $92,500 after previously climbing near $98,000.

The selloff saw over $525 million in leveraged positions liquidated within 60 minutes.

Meanwhile, gold and silver surged to record highs as investors sought refuge in safe-haven assets. Gold prices reached $4,670 per ounce, while silver climbed to $93.85, both showing strong gains amid growing concerns about trade tensions and geopolitical instability.

European leaders are preparing to respond to the tariff threats. The European Union is considering a range of retaliatory actions, including potential tariffs on $108 billion worth of U.S. imports and the activation of the EU's anti-coercion instrument. The move reflects growing unease over Trump's recent escalation of trade disputes and the risk of a full-scale trade war between the U.S. and Europe.

Why Did This Happen?

Trump announced a 10% tariff on goods from eight European nations, including France, Germany, and the United Kingdom, effective February 1, 2026. The tariff is set to increase to 25% by June unless the U.S. secures approval to acquire Greenland. The European Union responded with a firm warning, stating that the threats could lead to a dangerous downward spiral in transatlantic relations.

The move is part of a broader pattern of Trump's tariff policies, which have repeatedly disrupted global trade and financial markets. The current situation echoes past episodes, including Trump's October 2025 threats to impose 100% tariffs on China, which led to over $19 billion in crypto liquidations.

How Did Markets React?

Cryptocurrency markets reacted swiftly to the news. Bitcoin dropped nearly $4,000 in a two-hour span, reaching an intraday low of $91,935. Ether and other major cryptocurrencies also saw significant declines, with ether falling 4.9% and Solana dropping 8.6%.

Investors quickly shifted to traditional safe-haven assets. Gold hit a record $4,670 per ounce, while silver reached $94.12. The surge in gold prices was driven by growing concerns about trade instability and the potential for further policy shocks.

The broader market also experienced a risk-off sentiment. U.S. stock futures fell, the dollar weakened, and European markets prepared for potential spillover effects. The euro rose against the dollar, and investors increasingly favored yen and Swiss franc as safe-haven currencies.

What Are Analysts Watching Next?

Analysts are closely monitoring the upcoming emergency EU summit scheduled for January 22 in Brussels. The meeting is expected to finalize the bloc's response to the tariff threats and determine whether retaliatory measures will be implemented. European leaders have also expressed interest in using the World Economic Forum in Davos as a platform to de-escalate tensions.

The legal basis for Trump's tariff threats is also under scrutiny. The U.S. Supreme Court is reviewing the legality of Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs. A ruling against the administration could force the government to refund over $100 billion in collected tariffs, further complicating the political and financial landscape.

Investors are also watching for signs of a broader market correction. While Bitcoin has historically acted as a hedge against macroeconomic shocks, its recent correlation with risk assets has increased due to institutional adoption through spot ETFs. This means that crypto markets are more likely to follow traditional risk-on/risk-off patterns than act independently.

The coming weeks will be critical for global trade and financial markets. The outcome of negotiations between the U.S. and Europe, the Supreme Court's decision on tariff authority, and the broader geopolitical landscape will shape the next phase of market volatility and investor sentiment.

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