Tariff Increase Alert: Crypto Markets Drop While Gold Reaches Record Highs

The cryptocurrency market faced a major challenge last Monday from an unexpected direction—not from blockchain or technology, but from the world of international trade. New tariff threats from the United States against European products triggered a broad risk-off movement across global markets, leading to declines not only in cryptocurrencies but also across various asset classes. The momentum built by Bitcoin as it approached $98,000 last week suddenly halted, leaving traders and investors reevaluating their exposure to risky assets.

Tariff Fears Trigger Risk-Off Movement in Global Markets

Comments from President Donald Trump at the end of the week sparked a significant shift in market sentiment. He announced that the United States would impose a 10% tariff on products from eight European countries starting February 1, increasing to 25% in June unless a broader trade agreement is reached. Such a tariff commitment is not just an economic headline—it halted the risk-on pattern that had been fueling crypto bulls.

The selloff follows a broader risk-averse movement across all global markets. US equity index futures declined sharply in early trading, with Nasdaq 100 futures down over 1%. In Europe, futures also fell amid renewed concerns over tariffs and protectionism. Asian markets were mixed, with average losses across most indices.

This sign of risk aversion is evident not only in crypto but also in the shifting of capital toward traditional safe-haven assets. Gold and silver both hit record highs, while US government bond futures in Europe also rose. The USD weakened against some major currencies, reflecting a defensive stance ahead of the US trading session.

Liquidation Wave: $600 Million Long Positions Wiped Out in 24 Hours

Excessive volatility triggered massive liquidations in the cryptocurrency markets. Approximately $600 million in bullish crypto positions were wiped out in the past 24 hours according to data from Coinglass, most of which were long positions. This reflects how traders are quickly reducing leverage and reassessing their risk exposure as tariff uncertainty grows.

Bitcoin open interest declined as traders exited leveraged positions. This liquidation cascade is particularly evident in altcoin markets, where sentiment shifts faster and liquidity pools are smaller.

Bitcoin at Critical Support, Altcoins Suffer Larger Losses

Bitcoin fell below $93,000 at the end of the trading day, dropping over 2.5% that day. Current data shows BTC trading at $88.12K with a 24-hour decline of -2.40%, indicating ongoing pressure. The critical focus now is on the $90,000 support level—whether Bitcoin can hold here or fall further.

Altcoins experienced larger drops, a common pattern in risk-off environments. Solana declined over 6% in the past 24 hours according to the original report, but current data shows a -3.41% 24h change. XRP fell about 4% then, now at -2.94% 24h. Dogecoin dropped over 7% as initially noted, now at -4.42% 24h. Ethereum declined about 3% then, now at -3.16% 24h.

NEAR also suffered from the market downturn, reflecting a broader shift of capital away from high-beta altcoins. This pattern is consistent with market behavior when global risk sentiment turns negative—investors rotate away from more volatile tokens and back into more stable assets or cash positions.

Gold and Digital Assets: Diverging Paths in a Risk-Off Environment

An interesting contrast begins with the treatment of Bitcoin and other cryptocurrencies compared to traditional precious metals. While gold reached $5,500 per ounce with approximately $1.6 trillion in notional value shifting in a day, Bitcoin declined. This highlights a fundamental change in how investors view digital assets.

Market sentiment indicators like the Gold Fear & Greed Index from JM Bullion suggest extreme bullishness in precious metals. However, analogous indicators for crypto remain in fear. This reflects a critical realization: while gold has become the go-to safe-haven asset during risk-off periods, Bitcoin continues to trade like a high-beta risk asset. Investors seeking true store of value tend to prefer physical gold and silver over digital tokens during significant market stress.

Pudgy Penguins and the Broader NFT Ecosystem: Convergence of Web3 and Mainstream

The crypto market downturn does not encompass all innovations in the space. Pudgy Penguins emerges as one of the strongest NFT-native brands in the current cycle, shifting from a speculative “digital luxury goods” model to a multi-vertical consumer IP platform with real economic moat.

Its strategy is to attract users through mainstream channels first—toys, retail partnerships, viral media—before onboarding them into Web3 via games, NFTs, and the PENGU token. The ecosystem now spans phygital products (over $13M in retail sales and more than 1M units sold), games and experiences (Pudgy Party surpassed 500k downloads in just two weeks), and a widely distributed token activated in over 6M wallets.

While the market currently prices Pudgy at a premium compared to traditional IP peers, ongoing success depends on execution in retail expansion, gaming adoption, and deeper token utility. This demonstrates that the crypto ecosystem is not solely focused on price action—there are deeper business fundamentals at play.

Analysis and Forward Implications

This selloff suggests that market participants are reevaluating their exposure as macro risks re-emerge. The combination of tariff uncertainty, global equity weakness, and risk-off sentiment has created a challenging trading environment for high-beta assets like altcoins.

For Bitcoin, the $90,000 support level will be a critical juncture. If it holds, the market may stabilize and recover from tariff-driven fears. If it breaks, a broader decline could ensue. Currently, the crypto market appears to be tradable based on global risk sentiment, leaving prices sensitive to further news on tariff negotiations, geopolitics, and monetary policy decisions.

The key takeaway is that tariff uncertainty is not just a local issue—it has global implications that extend into digital asset markets and reshape how investors allocate capital to risk assets in the current environment.