Bitcoin plunged below $88,000 on Sunday as leveraged long positions got liquidated into the weekend, with traders bracing for what could be a volatile week ahead. The world’s largest cryptocurrency fell to approximately $87,900, wiping out tens of millions in leveraged positions as geopolitical risk piled onto already jittery markets.
The timing couldn’t be worse. U.S. stock futures open in just hours, and they’ll be greeting a market cocktail of Trump’s fresh 100% tariff threat against Canada, a looming government shutdown deadline on January 30, and a crypto market that just saw billions in liquidations over the past week.
What’s Driving The Selloff
The weekend slide extends a brutal stretch for Bitcoin bulls. Over the past week, the cryptocurrency market has seen more than $1 billion in liquidations, with the overwhelming majority coming from long positions. According to CoinGlass data, 92% of recent liquidations were traders betting on higher prices who got caught on the wrong side of the trade.
Bitcoin briefly touched $87,800 in late trading, its lowest level since early January. The drop follows a pattern that’s become painfully familiar: overleveraged traders chase momentum, volatility strikes, and exchanges automatically close positions in a cascade of forced selling. When liquidations hit at scale, the selling begets more selling.
The macro picture isn’t helping. Japan’s bond market turmoil, which saw 30-year yields spike to multi-decade highs earlier this month, has tightened global liquidity and unwound carry trades that had been supporting risk assets. When yen borrowing costs rise, traders who borrowed cheap yen to buy everything from Bitcoin to tech stocks suddenly face margin calls.
Trump’s Canada Bombshell
On Saturday, President Trump threatened to impose 100% tariffs on all Canadian goods if Prime Minister Mark Carney moves forward with a trade deal Canada recently struck with China. “If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the U.S.A.,” Trump wrote on Truth Social.
The timing is particularly jarring because just a week ago, Trump had blessed Canada’s negotiations with Beijing. “That’s what he should be doing. It’s a good thing for him to sign a trade deal,” Trump told reporters on January 16. The reversal came after Carney delivered a speech at the World Economic Forum in Davos that was widely interpreted as a rebuke of Trump’s trade policies, warning about “coercion by great powers” and calling on middle powers to band together.
Trump responded by calling Carney “Governor Carney” and accusing him of trying to make Canada a “drop off port” for Chinese goods to circumvent U.S. tariffs. He also revoked an invitation for Canada to join his “Board of Peace.”
Canada currently faces 35% tariffs on many goods under existing Trump administration policies, but a 100% levy would be catastrophic for cross-border trade worth hundreds of billions annually. Canada’s minister responsible for trade with the United States, Dominic LeBlanc, emphasized that Canada is not pursuing a free trade agreement with China and that the recent deal simply resolved “several important tariff issues.”
Shutdown Clock Ticking
Adding to market anxiety, the U.S. government faces another potential partial shutdown on January 30. While the House passed the final four spending bills on Thursday, the Senate still needs to approve the package when it returns this week. The contentious Homeland Security funding bill, which passed the House 220-207 along party lines, faces an uncertain path in the upper chamber where 60 votes are needed.
This comes just months after the longest government shutdown in U.S. history, which lasted 43 days through November. Senate Majority Leader John Thune said last week Congress was “on track” to avoid another closure, but the tight timeline leaves little room for error. The Senate has just days to process multiple funding bills before the deadline.
For markets, the combination of shutdown uncertainty and escalating trade tensions creates a toxic environment heading into a critical week. Federal employees are already preparing for potential furloughs, and any lapse in government funding would add another layer of uncertainty to an already fragile risk environment.
Futures Open Into Chaos
U.S. stock index futures begin trading Sunday evening, and they’ll be pricing in a dramatically different risk landscape than when markets closed Friday. The S&P 500 finished last week essentially flat, while the Nasdaq eked out modest gains. But those placid numbers mask significant underlying volatility and don’t reflect Trump’s weekend tariff escalation.
Bitcoin’s correlation with risk assets has strengthened in recent months, particularly during periods of geopolitical stress. When Bitcoin sold off 6.6% during recent tensions, gold rose 8.6%, reinforcing the pattern of crypto behaving as a risk asset rather than a safe haven during acute stress events.
The technical picture for Bitcoin has deteriorated significantly. The cryptocurrency has given up nearly all its 2026 gains and is now testing support levels that held during December’s holiday doldrums. A break below $87,000 could trigger another wave of liquidations, while any relief rally faces stiff resistance at the psychologically important $90,000 level.
What Traders Are Watching
The immediate focus will be on Sunday evening’s futures open. Any significant gap down could set the tone for a difficult week. Beyond that, traders are watching the Senate’s progress on funding bills, any clarification from the White House on the Canada tariff threat, and whether Bitcoin can hold above recent lows.
Long-term Bitcoin bulls point to continued institutional buying, with companies like Strategy and Metaplanet adding to positions even during recent weakness. But the near-term technical damage is substantial, and the macro headwinds aren’t dissipating.
For traders, the message is clear: risk management matters. The past week’s liquidation cascade demonstrated how quickly leveraged positions can unravel. With geopolitical uncertainty elevated and technical support levels being tested, the next few days could determine whether Bitcoin finds a bottom or faces another leg lower.
The broader question for markets is whether Trump’s tariff rhetoric represents negotiating bluster or a genuine policy shift. A 100% tariff on Canadian goods would upend North American supply chains, raise consumer prices, and potentially trigger a full-scale trade war with America’s closest ally. For now, markets are treating it as the latest salvo in an increasingly hostile relationship.
