Greenland Storm Hits. US Stocks Erase Over $1 Trillion in a Single Day, Bitcoin Drops Below $90,000 Mark

TradingKey - Greenland tariff war escalates, hitting US stocks and crypto markets hard, but Fundstrat expects a year-end recovery.

On Wednesday (January 21), hit by the Greenland tariffs, the crypto market plummeted over 4%, with market capitalization once again evaporating by more than $100 billion, briefly falling below the $3 trillion mark. Among them, Bitcoin ( BTC ) plunged through the $90,000 level with a massive bearish candle, with the current price at $88,938, testing the ascending channel.

[Bitcoin Price Chart, Source: TradingView]

Meanwhile, US stock markets fell sharply, with over $1.3 trillion in market value wiped out in a single day. All three major US indices declined, with the Nasdaq dropping 2.39%, the S&P 500 down 2.06%, and the Dow Jones falling 1.76%. Mega-cap tech stocks collectively dived, with NVIDIA ( NVDA ), Tesla ( TSLA ), and TSMC ( TSM) all falling more than 4%, while Amazon ( AMZN) and Apple ( AAPL) fell over 3%.

[Declines of the Three Major US Indices (January 20), Source: Google]

On January 20 local time, the European Parliament began retaliating against the latest US tariffs on Europe, announcing the freezing of the ratification process for the trade agreement reached with the US last year. Last Saturday, the US President announced a 10% tariff on eight European countries starting February 1, increasing to 25% on June 1, until a deal for the US to purchase Greenland is reached between the US and the EU.

Facing Europe's counterattack, US Commerce Secretary Howard Lutnick warned the EU against retaliation. Speaking at an event during the Davos World Economic Forum, Lutnick noted, "If Europe follows through on its threats of tariff retaliation, the situation will spiral back into a tit-for-tat cycle of tariff escalation."

Recently, as the US-EU tariff war has intensified, safe-haven demand has surged, and gold prices ( XAUUSD) soared past $4,800 to reach a new record high, while risk assets such as US stocks and cryptocurrencies faced downward pressure. Fundstrat Head of Research Tom Lee warned, "With geopolitical tensions, cryptocurrencies and the stock market could experience a painful decline in 2026, with a recovery expected by year-end. " Furthermore, Lee also maintained that Bitcoin will reach another all-time high this year.

In the view of JPMorgan Chase, the panic selling in the market serves as a signal to the Trump administration to take action to restore calm. Bob Michele, Chief Investment Officer at JPMorgan Chase, stated, "The market also experienced severe volatility last year, after which many issues were resolved and the market returned to tranquility. We need to hear similar news." However, will Trump release signals for tariff de-escalation? Given his past style, it cannot be ruled out that Trump might back down on this issue—let's wait and see!