Gold Breaks Records as Bitcoin Tumbles—Inside the Trade War Selloff

As gold reached historic price levels, Bitcoin’s weakness deepened on Monday, revealing a stark divergence between traditional safe-haven assets and digital markets during periods of acute geopolitical stress. The sharp market bifurcation—with gold climbing to record highs while Bitcoin retreated sharply—underscores how escalating trade tensions between Washington and Brussels are reshaping investor risk appetite.

Trump’s Tariff Ultimatum: The Catalyst Behind Monday’s Market Rout

Geopolitical uncertainty surged after U.S. President Donald Trump announced sweeping tariff plans that sent shockwaves through global markets. Trump signaled intentions to impose 10% tariffs beginning February 1 on imports from several European nations:

• Denmark
• Sweden
• France
• Germany
• Netherlands
• Finland

The tariff rate would escalate to 25% by June if negotiations stall. The United Kingdom and Norway also appeared on the target list for potential escalation. The announcement is deeply rooted in escalating tensions over Greenland, which has surfaced as a flashpoint in transatlantic relations.

European leaders responded with decisive action. French President Emmanuel Macron pushed the European Union to deploy its “anti-coercion instrument,” colloquially known as the EU’s “trade bazooka.” This mechanism would systematically restrict American access to European markets. Brussels is simultaneously preparing €93 billion ($108 billion) in countermeasures that had been previously delayed.

“At least judging from the first reactions, some European leaders are willing to adopt a confrontational stance,” noted Carsten Brzeski, global head of macro at ING, according to CNN.

Bitcoin’s High-Beta Collapse: $750 Million in Liquidations as Macro Fears Resurface

Bitcoin absorbed the initial shock of escalating trade rhetoric with a sharp decline. The cryptocurrency plummeted nearly 3.6% within hours, retreating from approximately $95,450 to below $92,000 according to TradingView data. This rapid descent triggered cascading liquidations across derivatives markets.

The selling intensity was remarkable: more than $750 million in long positions were wiped out within four hours, pushing 24-hour liquidations beyond $860 million, according to Coinglass. At the time of writing, Bitcoin had recovered modestly but remained under significant pressure at around $92,580.

The latest market snapshot shows Bitcoin trading at $89.09K, with a 24-hour change of +1.19% and daily trading volume at $1.07B—reflecting continued volatility and trader repositioning.

Crypto analysts characterize Bitcoin’s sensitivity to macro shocks as a function of its market behavior. “Bitcoin still behaves like a high-beta technology asset,” explained Andri Fauzan Adziima, research lead at Bitrue. “When macro uncertainty spikes, it gets hit first.”

Gold Reclaims Safe-Haven Crown: New Record High as Investors Flee Risk

While Bitcoin retreated, a dramatic reallocation toward traditional safety unfolded. Gold futures surged to an unprecedented record high of $4,667 per ounce, while silver ascended above $93 per ounce—marking a historic peak, according to Google Finance data.

This capital flight represents more than a simple price move; it signals a fundamental shift in how institutional and retail investors view risk during periods of trade escalation. Gold’s ascent to record territory coincides precisely with Bitcoin’s descent, illustrating how investors view the two assets through different lenses during geopolitical crises.

“When markets enter risk-off mode, gold traditionally captures the safety premium,” markets observers note. The divergence between Bitcoin and gold has become especially pronounced during trade-related uncertainty, as traditional commodities offer perceived stability that digital assets have yet to replicate during acute stress episodes.

U.S. equity futures also traded lower, reflecting the broad market anxiety ahead of Wall Street’s reopening.

Brussels Goes on Offense: EU Readies ‘Trade Bazooka’ as Negotiations Stall

The European Union signaled it would not passively absorb tariff threats. By activating its anti-coercion instrument, Brussels would gain a systematic mechanism to penalize American companies through market access restrictions. The €93 billion ($108 billion) in retaliatory tariffs—previously held in reserve—now appear poised for deployment.

This escalation transforms trade tensions from rhetorical to substantive. As Jeff Mei, chief operating officer at BTSE, explained: “This time the tariffs target some of America’s closest allies. If U.S. markets conclude that these threats are credible, institutions may continue scaling back their risk exposure.”

The credibility question looms large. Will Trump follow through, or will negotiations defuse the situation? Market pricing suggests significant uncertainty persists around the final outcome, keeping volatility elevated across asset classes.

What’s Next? Elevated Volatility and Capital Preservation Take Center Stage

Analysts caution that Bitcoin’s near-term path remains acutely exposed to geopolitical developments, particularly trade policy announcements, inflation expectations, and liquidity conditions. While previous macro-driven corrections have historically given way to recoveries, the current environment prioritizes downside protection over expansion.

With gold entering price discovery mode and Bitcoin exhibiting pronounced volatility, markets appear positioned for sustained turbulence until concrete developments emerge regarding U.S.–EU trade negotiations. The immediate investment imperative shifts toward capital preservation—a dynamic that has historically favored traditional safe-haven assets like gold over higher-beta alternatives.

The coming weeks will test whether trade tensions continue escalating or whether diplomatic channels restore confidence in global market stability.