FX.co ★ Bitcoin Tumbles on Risk-Off Sentiment

Bitcoin experienced a nearly 5% decline, dropping below $89,000 on January 20. This decrease erased the gains accumulated thus far in the year and paralleled a broader retreat from risk across global markets. The downturn was influenced by mounting tensions between the United States and Europe. President Trump's increasing rhetoric concerning Greenland has heightened these tensions, leading to investor unease. Trump has issued warnings about potential new tariffs on European countries that oppose his strategy, while European leaders are contemplating possible retaliatory actions. Concurrently, U.S. Treasury yields increased, and the dollar weakened, signaling diminishing confidence in American assets. Additionally, there is growing concern that Europe could leverage its substantial holdings of U.S. bonds and equities. In a separate development, software company Strategy (formerly known as MicroStrategy) announced it has purchased 22,305 bitcoins at the cost of approximately $2.13 billion earlier this week. This acquisition boosts its total bitcoin holdings to 709,715 and represents its largest purchase since November 2024, highlighting Strategy's ongoing commitment to enhancing its bitcoin holdings. However, the company's stock has declined by roughly 10% over the past three trading sessions.