Why is the crypto market down today? (Jan. 26)

The crypto market was still reeling from losses on Monday as investors fled to gold amid fresh geopolitical and macroeconomic concerns that dampened investor appetite in the sector.

According to data from crypto.news, the global crypto market fell below the $3 trillion mark for the first time since the beginning of the year, slumping nearly 3% as fresh macroeconomic and geopolitical factors spooked investors.

The Crypto Fear and Greed Index fell another five points to 20 on Monday, marking six consecutive days of extreme fear across the sector.

Bitcoin (BTC) fell 3% to an intraday an intraday low of $86,126 earlier today before recouping part of its losses as it managed to stabilize at $87,700 when writing. Ethereum (ETH), the largest altcoin in the market, was still down 3% at press time, trading at around $2,850, while other large-cap cryptocurrencies such as BNB (BNB), XRP (XRP), Solana (SOL), and Dogecoin (DOGE) were also in the red with losses ranging between 1-4%.

Data from CoinGlass shows this slump triggered $605 million in liquidations of bullish bets over the past 24 hours, led by $179.8 million in Bitcoin futures and $203.6 million in Ether-based futures.

The market tanked largely due to fears of a U.S.-Canada trade war. Market sentiment soured after President Donald Trump threatened a 100% tariff on all Canadian imports, warning the U.S.’s top trading partner against finalizing a free trade agreement with China after Canadian Prime Minister Mark Carney’s high-stakes visit to Beijing.

Investors remain wary as they recall the market volatility during the escalation of the U.S.-China trade war in October last year, when Bitcoin fell significantly following the Oct. 10 crash.

Fear of another US government shutdown grips market

Concerns about another potential U.S. government shutdown are also impacting the market. Investor appetite for crypto has decreased after Senate Democrats threatened to block a $1.2 trillion funding package if it includes funding for the Department of Homeland Security without significant reforms. This situation arose from ongoing protests in Minnesota following a fatal shooting involving federal agents.

As a result, there is a risk of a shutdown by the Jan. 31 deadline. Prediction markets like Kalshi showed odds of a shutdown had surged from 10% on Saturday to over 76% on Monday. At the same time, Polymarket odds reached 80%.

During the previous U.S. government shutdown spanning from the beginning of October to Nov. 12, Bitcoin fell nearly 21% from its all-time high to around $100,000, driven by prolonged political deadlock in Washington and Trump’s tariff threats on China, which triggered the Oct. 10 crypto market crash.

Gold has strongly outperformed Bitcoin since the crash, as traders appear to favor traditional safe-haven assets over volatile digital currencies, which has continued into the new year. 

Gold recently broke above the $5,000 milestone, marking over 17% gains so far in 2026, a sharp divergence from Bitcoin’s price action, which remains 30.4% below its record high of $126,080 hit in October last year.