Macro Fears Trigger $550M Crypto Liquidations – What’s Really Going On?

Crypto markets entered the new week on the back foot as a wave of macro uncertainty sparked heavy liquidations across major digital assets.

After trading in a tight range over the weekend, prices slid during early Asian hours, triggering more than $550 million in leveraged long liquidations, according to market data cited by QCP Asia.

Bitcoin briefly dipped to the $86,000 level before stabilizing, while Ethereum fell toward the $2,785 area.

The pullback stood in contrast to traditional safe havens, with gold and silver extending their recent rally as investors rotated into lower-risk assets.

Tariff Threats, Shutdown Fears, and FX Uncertainty Weigh on Markets

Market participants point to a cluster of macro developments driving the move, according to QCP.

Chief among them were comments from President Donald Trump on the possibility of imposing 100% tariffs on Canadian imports, renewed concern over a looming partial shutdown of the US government, and ongoing uncertainty around potential US-Japan coordination to arrest further weakness in the yen.

Currency markets remain a key pressure point. A “rate check” on USD/JPY by the New York Fed late last week signaled growing sensitivity to yen depreciation, with the 160 level widely viewed as a threshold that could prompt intervention.

While the pair has since pulled back, it continues to trade near two-month highs around 154, prompting investors to unwind short-yen positions rather than risk sudden policy action.

QCP analysis notes that crypto assets traded in a narrow range over the weekend before coming under pressure in early Asian hours, triggering over $550 million in leveraged long liquidations. BTC briefly tested $86K before finding support, while Ethereum fell to the $2,785 area.…

— Wu Blockchain (@WuBlockchain) January 26, 2026

US domestic politics are adding another layer of tension. Although broader risk sentiment found some relief after Canadian Prime Minister Mark Carney said Ottawa has no plans to pursue a free trade deal with China, fiscal negotiations in Washington remain unresolved.

House Republicans have advanced spending bills that include roughly $64.4 billion for border security and the Department of Homeland Security, while Senate Democrats have indicated they will block the measures.

With current government funding set to expire on January 30, failure to reach an agreement would result in a partial shutdown.

Markets appear to be taking that risk seriously. Polymarket odds currently imply roughly a 75% chance of a shutdown by January 31, a dynamic that echoes last autumn’s fiscal standoff, which coincided with a sharp drawdown in crypto prices.

Bitcoin Options Signal Rising Downside Protection as Volatility Climbs

Derivatives markets are already reflecting a more cautious stance. Put skews and implied volatility have risen across maturities, with traders rolling downside protection in bitcoin options from the 88,000 level toward 85,000, according to QCP.

Alongside ongoing geopolitical and fiscal headlines, markets face a busy week that includes major technology earnings and a Federal Reserve policy decision.

While the Fed is expected to hold rates steady, investors will be watching closely for any shift in Chair Jerome Powell’s guidance.

“With multiple macro risks unresolved, crypto prices are likely to chop around in the near term, pending greater clarity, particularly around the risk of a US government shutdown,” QCP said.