$1.8B liquidated in 48 hours as Bitcoin wipes out 2026 gains

Bitcoin dropped another 4% on Tuesday, with more than $1.8 billion liquidated over the past 48 hours amid tariff threats from US President Donald Trump and Japanese bond turmoil.

Bitcoin (BTC) fell to $87,790 on Coinbase in late trading on Tuesday, its lowest level since Dec. 31. Over the past 48 hours, more than $1.8 billion has been liquidated, around 93% of them long positions, reported Coinglass.

BTC slumps 10% in a week, wiping out all January gains. Source: TradingView

The asset has now wiped out all gains made so far this year and is down 10% from its year-to-date high of just under $98,000. It has also fallen below the 50-day exponential moving average (EMA), which served as support in the recent rally.

Crypto markets have collectively shed $225 billion in market capitalization, their largest decline since mid-November, with total capitalization now at $3.08 trillion.

Japanese bond market blowout or ‘sell America’ trade

Trump’s renewed tariff threats prompted a repeat of the so-called “Sell America” trade that emerged after last April’s tariff announcement, reported Reuters.

However, while many attribute the market volatility to Trump’s trade war escalation, there could be other factors at play.

Founder and CEO of 50T Funds, Dan Tapiero, said the “wipeout” was caused by “complete annihilation in Japanese bond markets infecting all markets right now.”

Tapiero predicted more gains for gold, which hit an all-time high of $4,835 per ounce on Tuesday, with Bitcoin to follow.

US Treasury Secretary Scott Bessent said the same thing on Tuesday: “I believe markets are going down because the Japanese [10-year] bond market had a six-standard-deviation move over the past two days.”

This has “nothing to do with Greenland,” he said.

Japanese 10-year government bond yields surged almost 19 basis points in two days, while 30-year yields posted their biggest daily jump since 2003 as investors braced for increased government spending and reduced liquidity, reported Reuters.

Tightening critical source of global liquidity

Jeff Ko, chief analyst at CoinEx Research, told Cointelegraph that the surge in Japanese bonds was driven by fiscal uncertainty and market volatility ahead of the snap election.

“This threatens to accelerate the carry trade unwind, further tightening a critical source of global liquidity,” he said. “Beyond the trade war, a capital war appears to be emerging,” he continued.

“Fund flows are shifting away from US assets as geopolitical tensions mount. Bitcoin finds itself caught in a tug-of-war — while it shares characteristics with hard assets like gold, it’s currently being sold off due to its heightened sensitivity to liquidity conditions.”

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