Crypto market rattles like Greenland row, Trump tariffs spook investors
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Bitcoin (BTC) and Ether (ETH) retested their more than two-week lows after the crypto and stock markets rallied after US President Donald Trump's fresh threat of tariffs. The possible tariffs are an attempt by the administration to persuade Denmark to reconsider its control of Greenland. European countries have shown little interest in negotiating, prompting crypto and equities investors to take a more risk-averse stance.
The S&P 500 index fell 1.9%, while gold prices rose to new highs on Tuesday. The total cryptocurrency market capitalization fell from nearly $3 trillion last Wednesday to $2.71 trillion on Tuesday.
The yield on the 5-year U.S. Treasury rose to its highest level in six months, a move usually associated with recession or rising inflation. Investors have demanded higher returns to hold US government debt, signaling a weakening of confidence.
Billionaire investor and hedge fund manager Ray Dalio told CNBC that a “new global financial crisis” could emerge as foreign governments reassess their exposure to U.S. assets amid uncertainty and economic stress. Dalio notes that history provides several examples of where economic conflicts have moved beyond trade to capital flows.
In the past, Dalio has raised concerns about waning confidence in the US dollar. While this backdrop looks good for those looking at cryptocurrencies as an alternative monetary system, silver has been the standout so far, up 64 percent since December. The precious metals market capitalization rose to $5.3 trillion.
European Commission President Ursula von der Leyen warned on Tuesday that any response to US threats would be “consistent, coordinated and proportionate”, raising fears of negative consequences for equity markets.
The value of the corporate market reaches up to Bitcoin
Bitcoin ranks as the eighth largest global trading asset with a market capitalization of $1.8 trillion, but competitors such as TSMC ( TSMC US ) and Saudi Aramco ( 2222 SR ) are quickly closing the gap. Ether's position seems even weaker with a market capitalization of $360 billion, which ranks it 42nd overall after being held by Home Depot ( HD US ) and Netflix ( NFLX ). The total cryptocurrency market capitalization is down 32% from its peak in October 2025.
Investors' attention has shifted to macroeconomic risks as the world's major central banks' high borrowing costs continue to rise. Japan, the world's fourth-largest economy, will hold a snap election that will give Prime Minister Sanai Takaichi the power to accelerate stimulus measures, the Financial Times reported. Japan's public debt exceeds 200% of GDP.
Related: Institutional Interest in Bitcoin Still Strong – CryptoQuant
The yield on Japan's 20-year government bond rose sharply on Tuesday. According to TD Securities, the move in Japan spilled over into the US, UK, Canada and other markets, “a warning sign for highly indebted countries that bond markets can swing quickly if fiscal policy loses credibility.”
These contamination risks are particularly high amid heightened geopolitical tensions, leaving the cryptocurrency market vulnerable. For now, the chances of Bitcoin retracing $95,000 and Ether (ETH) $3,300 will largely depend on whether or not President Donald Trump can reach some sort of deal with European leaders at meetings scheduled for this week.
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