Why is Crypto Crashing? Markets Brace for Trump’s Davos Speech as Macron Threatens EU ‘Trade Bazooka’ Retaliation

Why is crypto crashing right now? That question is echoing across trading desks as Bitcoin price slides, altcoins bleed harder, and global markets react to a rapidly escalating geopolitical standoff. Hitcoin crypto has entered a clear risk-off phase as fears of a renewed trade war between the United States and the European Union dominate headlines.

With US President Donald Trump heading to Davos and French President Emmanuel Macron openly threatening economic retaliation via a so-called “Trade Bazooka, ” uncertainty has replaced optimism. In moments like this, FUD spreads fast, leverage unwinds faster, and crypto takes the hit first.

A New Economic War Is Taking Shape

The world appears to be entering a new phase of conflict – not fought with weapons (for now) but with tariffs, sanctions, and economic pressure. President Trump’s pushing to acquire Greenland, framed as a national security necessity, has sent shockwaves far beyond the Arctic. What startled markets most wasn’t just the ambition itself, but the method.

After the EU refused to align with Washington’s position, the US announced a 10% tariff on several major European economies starting February 1, 2026. Even more concerning, those tariffs are set to jump to 25% by June 1 if no agreement is reached.

The response from Europe was swift and usually aggressive. Speaking in Davos, Macron warned that the EU could deploy its Anti-Coercion Instrument, the “Trade Bazooka,” to retaliate.

That tool allows Europe to impose sweeping countermeasures, from tariffs to restrictions on US companies operating in EU markets. For investors, this signaled one thing clearly. Nobody is safe, and alliances are no longer guaranteed. Friendships are terminated. Stronger countries do whatever they like, but one thing is for sure: volatility.

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Why Is Crypto Crashing as Risk Appetite Vanishes?

This is where crypto comes into play. BTC USD has been dumping hour after hour, sliding from around $95,000 to $88,000 in a short window. In Bitcoin BTC $89,090.89 4.05% Bitcoin BTC Price $89,090.89 4.05% /24h Volume in 24h $42.18B Price 7d Learn more terms, that move isn’t dramatic. But the impact on altcoins has been brutal.

(Source – TradingView)

Crypto markets are extremely sensitive to macro shocks, especially ones involving trade wars and geopolitical uncertainty. When global capital gets nervous, investors first rotate out of speculative assets. That means crypto, tech stocks, and high-beta trades are sold aggressively while capital flows toward cash, bonds, and gold.

(Source – CoinGlass)

The result has been cascading liquidations. Long positions get wiped, funding flips negative, and fear feeds on itself. FOMO disappears instantly, replaced by FUD. This doesn’t mean crypto fundamentals have sufficiently broken – it means markets are de-risking while waiting for clarity.

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Davos, Trump, and the Volatility Trigger

All eyes are now on Trump’s upcoming Davos speech. Markets know one thing about the US president: expect the unexpected. A single comment about tariffs, Greenlandm NATO, or trade concessions could flip sentiment instantly – for better or worse.

If Trump dumbs down on tariffs and nationalistic rhetoric, risk assets could face another leg down. If, however, he signals compromise or frames the tariffs as a negotiation tactic rather than an inevitability, markets may breathe again. Crypto traders are stuck pricing uncertainty in real time, which explains the violent swings.

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Three Scenarios Crypto Traders Are Watching Closely

The first scenario is escalation. If the US-EU trade war deepens, markets could slide into a prolonged risk-off environment. Bitcoin price would likely grind lower as capital continues to de-risk, possibly ending in a major liquidation event once something finally breaks. This could lead to levels like $69K-$70K.

(Source – TradingView)

The second scenario is compromise. A negotiated deal – potentially involving Greenland, trade terms, or security guarantees – could rapidly ease tensions. In that case, crypto could snap back just as fast as it fell, with dip buyers stepping in aggressively.

The third and perhaps most realistic scenario is exhaustion. Markets may simply tire of the noise. After an initial sell-off, prices stabilize, weak hands exit, and longer-term players quietly accumulate, setting the stage for the next leg of the cycle.

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Strategy Matters More Than Headlines

In the end, asking “why is crypto crashing?” is less important than understanding how cycles work. Markets always find an excuse to pump or dump. Trade wars, speeches, tariffs, or tweets are just the catalyst – not the cause.

Everything is cyclical. Volatility is the cost of opportunity. And as the old saying goes, the market can stay irrational far longer than you can stay solvent.  But also has a habit of pushing those who abandon their strategy at the worst possible moment.

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