US-EU Greenland Dispute: $865M Liquidity Trap Hits Bitcoin

On January 20, 2026, as the United States marked its presidential inauguration, the global financial markets experienced significant volatility driven by escalating trade friction between the US and European Union. Bitcoin, which had recently reached a high near $96,000, fell sharply to around $90,924. The decline resulted in the liquidation of more than $865 million in leveraged positions across major crypto exchanges.

The trigger stemmed from an announcement in Brussels, where the European Union is considering activating its Anti-Coercion Instrument in response to proposed US tariffs ranging from 10 to 25% on certain European exports. These tariffs are linked to ongoing negotiations over mineral rights in Greenland, a dispute that has intensified in recent months. The consideration of this retaliatory measure prompted a broad risk-off sentiment among institutional investors, shifting capital toward traditional safe-haven assets such as gold, which approached $4,700 per ounce.

Details of the Market Decline and Liquidation Cascade

Bitcoin’s rapid ascent in prior weeks had pushed open interest in perpetual futures contracts to elevated levels, creating a market environment susceptible to sudden reversals. Many traders, both retail and institutional, had taken highly leveraged long positions anticipating a continued push above $100,000. When the trade war news emerged, a wave of stop-loss orders executed automatically, leading to a cascading effect that accelerated the price drop.

Major crypto exchanges reported substantial liquidation volumes, with Hyperliquid recording the single largest event at $25.8 million and Bybit also processing significant forced closures. This deleveraging reduced overall open interest and removed a portion of speculative positions that had built up during the recent rally. These events, though disruptive in the short term, often clear excess leverage and help establish a more balanced market structure.

Attention has also turned to technical factors on the Chicago Mercantile Exchange Bitcoin futures chart, where an unfilled price gap existed near the $90,000 level from a prior weekend close. The swift downward move effectively closed this gap, a development that is often viewed as completing a necessary technical adjustment. With the gap now filled and over-leveraged positions largely cleared, traders are assessing if conditions are in place for renewed upward momentum in the coming sessions.