Analysts link the decline to U.S. tariff uncertainty, sticky inflation, Middle East tensions, and reduced expectations for near-term rate cuts.
Bitcoin suffered a sharp intraday decline on Monday that rippled across the broader crypto market, triggering hundreds of millions of liquidations and reinforcing the asset’s sensitivity to macroeconomic and geopolitical uncertainty. The move unfolded during early Asian trading hours and was accompanied by shifting expectations for U.S. tariffs, interest rates, and risk assets more broadly, according to market data and analysts.
During the early Asian session, bitcoin abruptly dropped about 4.6%, sliding from around $67,600 to $64,435 in under two hours based on CoinGecko figures. Although the price later steadied somewhat, trading near $66,280 and marking a 2.7% loss on the day, the damage to leveraged positions was already substantial.
Data from CoinGlass show that over the past 24 hours, liquidations across the entire crypto complex exceeded $505 million. Bitcoin-linked positions made up about $232 million of that total, while Ethereum accounted for $126 million. The scale of the forced unwinding highlighted how exposed highly leveraged traders remain to relatively brief price shocks in the leading digital assets.
The selloff did not follow any single, unexpected event in the crypto sector. Instead, it coincided with a fast shift in global risk sentiment as traders digested developments in U.S. trade policy and broader geopolitical tensions. The move highlighted that bitcoin, despite its reputation in some circles as an alternative to traditional assets, continues to trade in line with other risk-sensitive instruments when macro conditions turn uncertain.
Tim Sun, senior researcher at HashKey Group, linked the downturn to an accumulation of macro pressures rather than a crypto-specific trigger. He cited uncertainty around U.S. tariff policy, rising geopolitical risks, and persistent inflation as key drivers that forced investors to reassess risk exposure. According to Sun, these overlapping concerns led to a repricing of risk assets, with high-volatility markets such as crypto feeling the impact first.
Tariff policy has moved back into focus following a U.S. Supreme Court decision on Friday, which ruled that President Donald Trump’s “reciprocal” tariffs are illegal. Despite that ruling, Trump has proceeded to impose a broad 10% global tariff. The resulting ambiguity over the direction of trade policy has added another layer of uncertainty for investors trying to gauge global growth and inflation prospects.
Sun also pointed to sticky December PCE inflation data as a sign that price pressures remain persistent. At the same time, tensions in the Middle East have supported crude oil at periodic highs, further complicating the inflation outlook. These developments have filtered into expectations for U.S. monetary policy. Interest rate markets have largely removed the prospect of a rate cut in March, with the Federal target rate now widely expected to stay within the 3.50% to 3.75% range at the upcoming FOMC meeting.
According to the FedWatch tool, market-implied probabilities for keeping rates unchanged have moved from 90% last week to 96% as of Monday. On prediction platform Myriad, users assign just a 21% likelihood to the Federal Reserve delivering more than a 25-basis-point cut before July, sharply lower than the 40% probability seen earlier in the month. This repricing signals a more cautious outlook on policy easing, tempering risk appetite across markets.
The change in sentiment has been visible beyond crypto. Gold rose 1.23% on the day, to 5,166 per ounce, suggesting a shift toward perceived havens as investors rebalanced portfolios away from volatile assets.
Sun described the recent pullback as part of a broader contraction in risk appetite. In his view, a landscape marked by policy instability, entrenched inflation pressures, and elevated geopolitical risk has pushed investors toward safer assets and away from markets that depend heavily on liquidity. Crypto, and bitcoin in particular, remain categorized by institutional capital as high-risk instruments at the far end of the risk spectrum.
This risk classification has important consequences for how bitcoin trades during periods of stress. Rather than behaving as a separate or insulating asset class, it has tended to move with other speculative segments of the market. The Monday selloff supports that pattern, with the downturn in crypto coinciding with increased uncertainty around traditional risk assets.
Market positioning on Myriad underlines the shift in sentiment. Users on the prediction platform, owned by Decrypt’s parent company Dastan, currently give a 37% probability that bitcoin’s next significant move will take it to $84,000. That figure is almost 10 percentage points lower than Sunday’s peak probability of 46.4%, indicating a rapid cooling in expectations for near-term upside.
Sun expects that this environment will limit fresh inflows into crypto. He anticipates a drawn-out bottoming process, as heightened uncertainty has reduced the willingness of sidelined capital to commit new money. Any rebounds in bitcoin’s price, he warned, are likely to be technical in nature, driven by short-term trading dynamics rather than a shift in fundamental liquidity conditions. In this context, periodic bounces should not automatically be interpreted as the start of a sustained uptrend.
Looking ahead, Sun argued that a durable recovery in the crypto market will hinge on a broad improvement in macro signals rather than developments confined to digital assets. Several factors will be critical to monitor:
Sun stressed that bitcoin is unlikely to stage an independent rally if mainstream risk markets remain under pressure. In his view, stabilization in stocks and other conventional risk assets is a necessary foundation for any lasting move higher in crypto. Until that stabilization occurs, digital assets may continue to behave as leveraged expressions of broader market sentiment, responding quickly and sometimes sharply to changing views on tariffs, rates, and geopolitical risk.
Monday’s rapid decline in bitcoin, and the more than $470 million erased from leveraged crypto positions, reflected a market grappling with complex macro forces rather than crypto-specific news. Shifting expectations around U.S. tariff policy, persistent inflation, higher energy prices, and recalibrated rate-cut odds have combined to curtail risk-taking. As institutional investors continue to categorize bitcoin as a high-volatility risk asset, its fortunes remain tied to broader market conditions. Analysts point to a need for clearer progress on inflation, calmer geopolitics, and steadier traditional risk markets before a sustained recovery in crypto prices can take hold.
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