Crypto Market Shed $220B This Week as Bitcoin Slips and Select Tokens Defy the Selloff

Bitcoin and the broader cryptocurrency market lost over $220 billion in value this week, with Bitcoin dipping below $90,000. The decline came amid heightened geopolitical tensions and regulatory uncertainty, which pushed investors to safe-haven assets like gold. Despite the selloff, some altcoins showed resilience, indicating uneven performance across the market.

On-chain data from analytics firm CryptoQuant shows that Bitcoin holders have entered a net realized loss phase for the first time since October 2023. Annual net realized profits have fallen to 2.5 million BTC, the lowest level since March 2024. This shift signals weakening investor conviction, and growing capital preservation strategies.

Global risk-off sentiment intensified as U.S. President Donald Trump's tariff threats over Greenland triggered a sell-off in risk assets. Bitcoin dropped below $90,000 in early January, while gold and silver hit record highs. The selloff accelerated after Trump's statements on trade, prompting a sharp decline in the U.S. dollar and a flight to safety.

Why Did This Happen?

The selloff began with Trump's proposed tariffs on European allies, which raised fears of renewed trade conflict. This triggered a risk-off environment, with Bitcoin and other crypto assets falling alongside equities. On Jan. 21, over $1 billion in leveraged crypto positions were liquidated, with losses split evenly between long and short positions.

Investor sentiment was further impacted by concerns about U.S. inflation. According to a report from the Peterson Institute for International Economics, U.S. consumer prices could rise above 4% in 2026, potentially delaying Federal Reserve rate cuts. Sticky inflation is a key challenge for Bitcoin and the broader crypto market, which relies on accommodative monetary policy.

How Did Markets React?

Bitcoin rebounded above $90,000 after Trump announced a framework deal with NATO on Greenland, easing some of the trade-war fears. However, the recovery was limited, with institutional demand for Bitcoin ETFs showing outflows of over $700 million on Wednesday. These outflows capped any strong resurgence in the price of Bitcoin.

Gold and silver prices surged during the selloff, hitting record highs as investors sought safety. However, when Trump reversed his tariff threat, gold prices retreated, signaling a return to risk-on sentiment. Bitcoin, in contrast, continued to trade near the $90,000 level as markets digested the news.

What Are Analysts Watching Next?

Analysts are closely monitoring Bitcoin's key technical levels. The $90,000 level remains a critical support zone, with a break below this threshold potentially leading to further declines. On the other hand, a rebound above the 50-day EMA at $92,345 could signal a short-term recovery.

Regulatory developments are also in focus. BitGo recently received government approval to convert its trust company into a federally chartered bank for digital assets. This move is seen as a step toward regulatory clarity for the crypto industry, with Kraken and other firms also preparing for potential IPOs.

Market observers are also watching for signs of institutional adoption, despite slower progress in 2025. While regulatory uncertainty remains, analysts like Wenny Cai of SynFutures believe the long-term institutional trend is unlikely to reverse. Bitcoin's drop below $90,000 was partly attributed to over $1 billion in liquidations, but the broader crypto adoption narrative remains intact.

The U.S. dollar's performance is another key factor. With the dollar weakening against gold and other safe-haven assets, analysts warn of potential stagflation if inflation remains high. The upcoming PCE inflation report is expected to provide clarity on whether the Federal Reserve will maintain its current rate stance.