Geopolitical Tensions and Policy Hopes Leave Bitcoin Down 6% in Early 2026

Bitcoin has extended its pullback into negative territory for 2026, with the world’s largest cryptocurrency trading near $78,510 as of early February. Despite a brief recovery sparked by President Trump’s comments at the World Economic Forum in Davos, the digital asset failed to sustain its gains, ultimately falling approximately 6.57% over the past 24 hours.

Trump’s Dovish Greenland Stance Offers Only Temporary Relief

During his address at the WEF on January 21, Bitcoin initially surged above $90,000 after President Trump stated that the U.S. had no intention of taking Greenland by force. The remark temporarily eased geopolitical tensions that had unsettled global financial markets over the previous days. The president further boosted sentiment by expressing confidence about the passage of a comprehensive crypto market structure bill—a development that crypto advocates have anticipated for regulatory clarity.

However, this optimism proved short-lived. Within hours, Bitcoin reversed its gains and sank below $87,500, ultimately reaching current levels around $78,500. The inability to maintain the recovery underscores how fragile market sentiment has become in the face of broader macroeconomic headwinds.

Crypto Assets Broadly Under Pressure

Bitcoin’s struggles are emblematic of a wider selloff across the cryptocurrency sector. Ethereum has declined to approximately $2,450, while XRP trades near $1.66 and Solana has retreated to around $105.07. All three assets have succumbed to the same risk-off dynamics that have gripped Bitcoin.

By contrast, traditional equity markets demonstrated more resilience, with the Nasdaq and S&P 500 maintaining modest gains despite market volatility. Yet one asset class has significantly outperformed crypto: precious metals. Gold surged an additional 1.5% on the trading day following Trump’s Davos comments, reaching fresh record highs above $4,800 per ounce. Silver, having soared to its own all-time peak the previous day, remained essentially flat. This divergence—where investors flee to gold while abandoning crypto—reveals a decisive shift toward safe-haven positioning.

The Japanese Bond Market Shock Ripples Through Global Finance

The immediate catalyst for this week’s broader market tumult traces back to mounting tensions between the U.S. and its European allies regarding Greenland’s future status, combined with an acute crisis in Japan’s government bond market. A sudden panic in Japanese government bonds on Tuesday triggered sharp losses across risk assets worldwide, including cryptocurrencies.

Though Japanese equities and bonds staged a modest recovery on Wednesday, the damage to market confidence persisted throughout global financial systems. According to prominent crypto analyst and macro prognosticator Arthur Hayes, the sharp spike in Japanese government bond yields represents “the match” that could ignite a full-blown risk-off cycle. “Let’s see how big the fire gets,” Hayes cautioned, suggesting that the fallout may only be in its early stages.

What Lies Ahead for Bitcoin in 2026

The combination of geopolitical tensions, bond market instability, and shifting risk sentiment creates a challenging backdrop for cryptocurrency investors. While regulatory optimism from Washington offers a potential silver lining, it appears insufficient to counteract the gravitational pull of macro uncertainty. The preferential demand for gold over Bitcoin—a telling metric for risk appetite—suggests that markets remain unconvinced about digital assets’ value proposition during periods of global strain.

As February begins, Bitcoin and the broader crypto market face a critical juncture. Recovery will likely depend on stabilization in traditional financial markets, a de-escalation of geopolitical tensions, and renewed confidence that the crypto market structure bill will materialize. Until those conditions align, Bitcoin may remain vulnerable to further downside pressure.