EU–US Economic Conflict Sparks Sharp Crypto Market Sell-Off

Crypto Caught Between Politics and Policy

Crypto markets saw sharp intraday swings as a flood of political and macro headlines hit simultaneously. Bitcoin dropped below $88,000, highlighting how sensitive the market currently is to policy signals rather than pure technicals.

The catalyst mix included trade tensions, crypto legislation comments, and aggressive rhetoric from Washington — all landing within hours.

By TradingView - BTCUSD_2026-01-21 (1Y)

EU Suspends Trade Deal With the US, Risk Assets React

Reports that the European Union officially suspended trade negotiations with the United States added a fresh layer of uncertainty to global markets.

Risk assets reacted quickly, with crypto following equities lower before stabilising. While the decision is not crypto-specific, it reinforced broader concerns around global trade fragmentation and geopolitical risk.

Trump Doubles Down on Crypto Leadership

At the same time, Donald Trump delivered a series of strongly pro-crypto messages:

1. The US should remain “the crypto capital of the world”
2. He hopes to sign a crypto bill soon
3. Congress is working on crypto market structure legislation
4. Banks will go “all in on crypto” once regulation is clear

Trump also dismissed the recent stock market dip as “peanuts” and claimed markets could double from here, adding fuel to speculative sentiment.

Banks vs Crypto: The Political Clash

Adding to the narrative, Eric Trump stated that banks are “doing everything they can” to block crypto legislation — reinforcing the idea of an ongoing power struggle between traditional finance and digital assets.

Meanwhile, Brian Armstrong, CEO of Coinbase, publicly criticised the French central bank governor’s understanding of Bitcoin, highlighting growing tension between crypto firms and European regulators.

Bitcoin Price Action: Volatility, Not Breakdown

Despite the chaos, price action tells a more nuanced story:

• Bitcoin (BTC): ~$87,700 to ~$90,000 range, heavy volatility
• Ethereum (ETH): ~$2,900, under pressure but holding structure
• Market tone: Short-term fear, no structural collapse

The quick rebound after the dip suggests buyers are still active, especially on political-driven pullbacks.

Market Outlook: Headlines Rule the Short Term

For now, crypto remains headline-driven:

• Bullish forces: US crypto legislation, Trump’s public support, institutional readiness
• Bearish forces: Trade tensions, macro uncertainty, regulatory clashes in Europe

Until clarity emerges on both US crypto laws and EU–US trade relations, volatility is likely to remain elevated.

$BTC, $ETH