by Enoch Mwathwa
The crypto market extended its decline on January 26, with Bitcoin falling below the $87,000 mark and revisiting recent lows. The pullback followed a sharp shift in global risk sentiment, driven by renewed trade war fears between the United States and Canada, political uncertainty in Washington, and growing caution ahead of key U.S. economic events.
Trade Tensions and Political Risks Weigh on Crypto Prices
Bitcoin price led the market lower after breaking below a key resistance level and sliding to around $86,000 over the weekend. Altcoins followed the move, as traders reduced exposure across risk assets. Market data shows that roughly $100 million exited the crypto market shortly after the latest geopolitical headlines emerged.
The sell-off accelerated after U.S. President Donald Trump threatened to impose 100% tariffs on Canada, accusing the country of engaging in trade arrangements with China. The statement rattled global markets and pushed investors toward a risk-off stance. Although Canadian officials denied any intention to strike a deal with China, uncertainty around trade relations continued to pressure sentiment.
BREAKING
$100,000,000,000 HAS BEEN WIPED OUT OF THE CRYPTO MARKET TODAY. pic.twitter.com/pKaNjD9Xw2
— Ash Crypto (@AshCrypto) January 25, 2026
At the same time, fears of a potential U.S. government shutdown added to market stress. Lawmakers have yet to pass a funding bill to keep federal agencies operating. While the House of Representatives approved a funding measure last week, the bill now faces resistance in the Senate. Reports indicate that Democrats have refused to advance the process, citing national outrage following recent shootings in Minneapolis.
A shutdown would not only disrupt government operations but also stall progress on key crypto-related legislation. The CLARITY Act, which remains on the Senate agenda, could face further delays if lawmakers fail to reach an agreement. Investors see regulatory uncertainty as a negative signal, increasing the risk of further downside in Bitcoin and the broader crypto market.
Key U.S. Economic Events Could Shift Market Direction
Despite the current bearish tone, several upcoming U.S. economic events could influence market direction. On Wednesday, the Federal Reserve will hold its first FOMC meeting of the year. Markets widely expect policymakers to keep interest rates unchanged after the Fed delivered a 25-basis-point cut in December, bringing the target range to 3.5%–3.75%.
Buckle up for a huge week ahead:
1. Markets React to 100% Canada Tariff Threat – Tonight
2. Markets React to 75% Chance of Govt Shutdown – Tonight
3. January Consumer Confidence data – Tuesday
4. Fed Interest Rate Decision and Press Conference – Wednesday
5. Microsoft, Meta,…
— The Kobeissi Letter (@KobeissiLetter) January 25, 2026
Investors also await the release of December Producer Price Index (PPI) inflation data. Bitcoin has shown sensitivity to inflation metrics in recent months. In November, PPI data exceeded expectations and kept crypto prices under pressure. A similar outcome could reinforce bearish sentiment, while softer inflation data may offer temporary relief.
For now, traders remain cautious as macroeconomic risks dominate headlines. Until clarity emerges on trade policy, government funding, and monetary direction, the crypto market may continue to struggle to regain momentum.
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