When Tariffs Meet Trading Algorithms: The Week That Tested Bitcoin's Resolve

Bitcoin started last week at $93K. By Tuesday, it was trading below $90K. By Sunday, it hit $86K. If you felt queasy watching that, you weren't alone because $875 million in leveraged positions got liquidated in 24 hours after Trump's Greenland tariff threats rattled global markets.

But here's what separates noise from signal: Bitcoin is now trading at $88K with the 100-week moving average ($87,145) acting as a critical floor. This signals deleveraging.

📰 Last Week Recap (January 20th - 26th)

The Tariff Shockwave

  • Trump announced escalating tariffs on 8 European nations (Denmark, Norway, Sweden, France, Germany, UK, Netherlands, Finland) over Greenland dispute

  • Tariffs set at 10% starting February 1, escalating to 25% by June 1

  • $875M in crypto liquidations within 24 hours while 90% were over leveraged in long positions

  • Bitcoin fell from $93K to $86K (7.5% decline) during thin holiday trading liquidity

  • Japan's bond market collapse + tariff threats = global risk-off cascade

BTC Price Action & Technical Levels

  • Current price: ~$88K (down from $97K high on January 14)

  • CME futures gap created at $89,265 when markets opened Sunday keep in mind historically these gaps get filled

  • Critical support: 100-week MA at $87,145 (holding so far)

  • ETF buyer cost basis: $84,099 provides secondary support

  • Next resistance: $90K-$92K, then $94.5K-$97K

  • RSI neutral at ~52, consolidating after Bollinger Bands squeeze

  • Market structure: downtrend but holding long-term support

ETF Flows: The Institutional Tug-of-War

  • Early January surge: $1.2B in first 2 trading days, $697M on January 5 (largest single day since October)

  • Mid-month reversal: $243M outflow on January 7 as consolidation began

  • Fidelity's FBTC led redemptions at -$312M

  • BlackRock's IBIT absorbed $228M inflows even during selloff - institutional anchor holding

  • Net result: Volatility in flows but no capitulation selling

Altcoin Performance

  • Ethereum: Held $2,900-$3,100 range despite BTC weakness, currently $2,905

    • Lost $3K level temporarily but showing relative strength

    • Spot ETH ETFs saw mixed flows but $114M inflows on January 7

  • Solana: Down to $127-$135 range from $144 highs

    • SOL ETFs crossed $1B AUM milestone

    • Institutional adoption expanding through Coinbase CFTC-regulated futures

Macro Crosswinds

  • Gold surged 1.5% to record highs above $4,979 as safe-haven bid intensified

  • S&P 500 futures fell 0.7%, Nasdaq -1% on tariff news

  • Dollar weakened 0.3% vs yen

  • Fed policy uncertainty building ahead of Jerome Powell's May 15 term expiration

Regulatory Progress (The Real Catalyst)

  • Senate Banking Committee confirmed CLARITY Act markup sessions for January

  • GENIUS Act implementation rules deadline: July 18, 2026

  • FDIC Chair Travis Hill's reversal of crypto banking "pause letters" taking effect

  • SEC Crypto 2.0 task force under Commissioner Hester Peirce ramping up

📅 This Week to Watch (January 27th - 31st)

Economic Data & Events:

  • Monday 1/27: Markets processing weekend tariff developments

  • Tuesday 1/28: Consumer confidence data, watch for recession signals

  • Wednesday 1/29: FOMC minutes release (critical for rate cut expectations)

  • Thursday 1/30: Initial jobless claims, Q4 GDP preliminary data

  • Friday 1/31: Government shutdown deadline, crypto regulatory agencies could face disruptions

  • Friday 1/31: PCE inflation data (Fed's preferred inflation gauge)

Crypto-Specific Catalysts:

  • Senate Banking markup sessions expected this week on CLARITY Act

  • Supreme Court tariff ruling potentially Friday (76% odds of invalidation per Polymarket)

  • Bitcoin options expiry creating volatility zone

  • CME gap at $89,265 likely to get tested/filled

Key Levels to Watch:

  • BTC support: $87,145 (100-week MA) and $84,099 (ETF cost basis)

  • BTC resistance: $89,265 (CME gap fill), then $90K-$92K

  • ETH support: $2,850-$2,900

  • SOL resistance: $125 critical level for upward continuation

Weekly Market Signal: 🔴 Neutral-to-Bearish (Deleveraging Phase)

⚠️ Bias: Short-term downtrend with critical support tests ahead. Bitcoin broke below the 50-day MA ($90K) and is now testing the 100-week MA ($87,145). This is a major line in the sand.

The tariff induced liquidation cascade flushed out over leveraged traders ($875M in 24 hours), which is actually healthy deleveraging for the next leg up. Open interest has been declining, reducing systemic risk in the system.

However: A sustained break below $87K opens the door to $84K (ETF cost basis) and potentially $80K. The market structure is firmly in a downtrend until BTC can reclaim $90K+ with volume.

What's Different This Time: Institutional absorption continues while BlackRock's IBIT saw net inflows even during the selloff. The selling pressure is primarily overleveraged retail getting flushed, not institutional capitulation.

Fear & Greed Index: 🔴 Extreme Fear (Sub 25)

We're back in extreme fear territory. This is where opportunities form for patient capital. The last time we saw sub-20 readings in early January, Bitcoin rallied from $85K to $97K within 2 weeks.

The difference now? We have macro headwinds (tariffs, government shutdown risk, Fed uncertainty) vs pure crypto-specific fear.

BTC | ETH | SOL

Weekly Price Action

Bitcoin (~$88K)

  • Last week's action: Fell from $93K → $90K → $86K on tariff news, recovered to $88K

  • Critical juncture: Testing 100-week MA support at $87,145 after breaking 50 day MA

  • CME gap: Created at $89,265 which historically these get filled within days-to-weeks

  • Key support: $87,145 (100-week MA), $84,099 (ETF buyer cost basis), $80K psychological

  • Key resistance: $89,265 (gap fill), $90K-$92K (reclaim 50-day MA), $94.5K-$97K

  • Market structure: Downtrend active with a need for a daily close above $90K to invalidate

  • RSI: ~48 this is neutral but showing downward momentum

  • Risk: Break below $87K could trigger cascade to $84K → $80K → $76K (April 2025 low)

  • Upside scenario: CME gap fill to $89K, then retest of $90K-$92K range

Ethereum ($2,900)

  • Relative strength vs BTC intact, this didn't collapse when BTC fell to $86K

  • Held $2,850-$2,900 support zone despite losing $3K level

  • ETF flows mixed but showed $114M inflows on strong days

  • Layer 2 scaling narrative + RWA tokenization keeping institutional interest

  • Watch $2,850 support this break could lead to $2,600-$2,700 retest

  • Upside: Reclaim $3,100, then $3,300 to set up for next leg

Solana ($124)

  • Weakest of the majors it is down 10%+ from $144 highs

  • SOL ETF AUM crossed $1B but price action lagging

  • Developer activity and on-chain metrics remain strong

  • Support zone: $120-$125

  • Needs to reclaim $135-$140 to rebuild bullish structure

  • Risk: Break below $120 opens door to $100-$110

The Tariff Wild Card: Temporary Noise or Structural Shift?

Let's be blunt: Trump's tariff theatrics have crypto markets trading like risk assets, not digital gold.

The Greenland tariff announcement (10% escalating to 25%) triggered:

  • $875M in liquidations

  • 7.5% BTC price decline

  • Global equity selloff

  • Bitcoin correlation with S&P 500 back to 0.8+

Here's the critical question: Do tariffs structurally change Bitcoin's bull case? No.

Short-term (1-4 weeks): Tariffs create macro volatility. If they trigger inflation fears OR delay Fed rate cuts, risk assets (including crypto) face headwinds. Markets hate uncertainty.

Medium-term (3-6 months): If tariffs actually materialize and stick, inflation concerns could paradoxically benefit Bitcoin as an inflation hedge. Gold's 1.5% surge during the tariff selloff is a preview of this dynamic.

What to watch:

  • Supreme Court ruling on tariff legality (Friday, January 31) - 76% odds of invalidation per prediction markets

  • European retaliation measures

  • Fed's response to inflation pressures from tariffs

The trade: Tariff headlines create short-term dips = accumulation opportunities. The regulatory infrastructure being built (CLARITY Act, GENIUS Act, CFTC crypto sprint) is the actual catalyst that matters for 2026.

Don't confuse short-term noise with long-term signal.

Regulatory Momentum: The Unstoppable Force

While everyone obsessed over tariffs, the real story last week was regulatory progress accelerating.

CLARITY Act Timeline Update:

  • Senate Banking Committee confirmed markup sessions for this week (January 27-31)

  • White House crypto adviser David Sacks: "We are closer than ever to passing landmark crypto market structure legislation"

  • House already passed version in July 2025

  • Probability of passage before midterms: 60-65% (up from 50%)

  • Once passed, ends SEC-CFTC turf war, defines BTC/ETH/SOL as commodities under CFTC

Why This Matters More Than Tariffs: When institutional capital managers know:

  1. Which regulator oversees which assets

  2. Clear custody rules

  3. Tax treatment certainty

  4. Compliance frameworks

...they can allocate. The $23B in 2025 ETF inflows becomes $50B+ in 2026.

GENIUS Act Milestones:

  • Implementation rules due: July 18, 2026

  • Stablecoin framework goes live: January 2027 OR 120 days post-final rules

  • Enables banks to issue dollar-backed stablecoins through FDIC-supervised subsidiaries

  • Stablecoin market cap projection: $1.2 trillion by end of 2026 (from $300B now)

CFTC "Crypto Sprint" (Ends August 2026):

  • Spot crypto trading rules

  • Tokenized collateral in derivatives markets

  • Blockchain integration in traditional finance

  • Commissioner Michael Selig confirmed December 18 - "opening floodgates" for BTC derivatives expansion

State Bitcoin Reserves: The Slow-Moving Tsunami

Texas holds $5M in BlackRock Bitcoin ETF, planning additional $5M direct BTC purchase.

Arizona, New Hampshire, and 8-12 other states have active legislation for Bitcoin reserve allocations ranging from $50M-$200M each.

This isn't speculative anymore. This is sovereign adoption.

When states treat Bitcoin as infrastructure (not speculation), it validates the asset class at the highest governmental level. The impact compounds over years, not weeks.

The Week Ahead: Navigating The Gauntlet

Short-term (next 7 days):

  • Supreme Court tariff ruling (Friday 1/31) - 76% odds of invalidation could remove macro overhang

  • CLARITY Act markup sessions - actual legislative progress vs promises

  • Government shutdown deadline (Friday 1/31) - low probability but non-zero risk to crypto regulatory agencies

  • FOMC minutes Wednesday - any dovish surprises could trigger relief rally

  • CME gap fill to $89,265 - technical target likely this week

  • 100-week MA defense at $87,145 - failure here opens $84K → $80K downside

Trading Levels:

  • Bullish scenario: CME gap fill ($89K) → reclaim $90K → test $92K-$94K

  • Neutral scenario: Chop between $86K-$90K as macro uncertainty persists

  • Bearish scenario: Break $87K → test $84K ETF cost basis → potential $80K

Medium-term (Q1 2026):

  • CLARITY Act passage probability: 60-65% before midterms

  • State Bitcoin reserve announcements accelerating

  • Stablecoin implementation rulemaking from Treasury

  • ETF flows stabilizing after tax-loss harvesting ended

Long-term (2026 full year):

  • GENIUS Act goes live (Jan 2027 or 120 days post-final regs)

  • CFTC crypto sprint completes (August 2026)

  • Bitcoin targets: $120K-$170K base case, $200K-$250K bull case

  • Stablecoin market cap: $1.2 trillion (4x current)

Final Take

Bitcoin fell 7.5% last week on tariff headlines. That's not the story.

The story is that Bitcoin held the 100-week moving average at $87,145 despite $875M in liquidations, global risk-off, and maximum macro uncertainty.

The story is that XRP defied all expectations, posting 25% gains and 43 consecutive days of ETF inflows without a single redemption.

The story is that Senate Banking Committee is markup-ready on CLARITY Act this week, potentially ending years of regulatory ambiguity.

The story is that stablecoins are on track to hit $1.2 trillion market cap by year-end, cementing crypto's role in global finance infrastructure.

What We're Watching This Week:

  1. $87,145 defense - This is Bitcoin's Maginot Line. Hold here = base intact. Break here = $84K → $80K pain trade.

  2. CLARITY Act markup sessions - Words matter less than actions. If Senate Banking advances this bill, institutional capital waiting on the sidelines gets the green light.

  3. Supreme Court tariff ruling Friday - Invalidation (76% odds) removes macro overhang. Upholding tariffs extends uncertainty and potential inflation fears.

  4. CME gap fill at $89,265 - Technical traders will push for this. If it fills with volume, next stop is $90K-$92K retest.

  5. Government shutdown Friday - Low probability but watch crypto regulatory agencies (SEC, CFTC) for potential disruptions.

The Bottom Line:

Last week tested conviction. This week tests patience.

Bitcoin's fundamentals didn't change, the regulatory infrastructure being built in 2026 is still the most bullish setup crypto has ever seen. But markets don't care about fundamentals when macro fear is spiking.

The 100-week MA at $87,145 is holding. That's the defense line. Below that, we're looking at $84K (ETF cost basis) and potentially $80K (April 2025 low retest).

Above that? CME gap fill to $89K, reclaim of $90K, and potentially a squeeze back to $92K-$94K as overleveraged shorts get trapped.

The tariff headlines are noise. The CLARITY Act progress is signal. The deleveraging is healthy. The institutional absorption continues.

Stay defensive this week. Protect your downside at $87K. But if you're a long-term holder, these dips into extreme fear with fundamentals intact are exactly when you accumulate.

The Bollinger Bands squeeze from two weeks ago is still resolving. We just needed to flush out the leverage first.

The beach ball is still underwater. The regulatory rails are still being built. The institutions are still accumulating (look at BlackRock's IBIT flows).

When this consolidation breaks to the upside - and it will - the move will be violent.

Until then: Watch $87K, track CLARITY Act progress, and ignore the tariff theater.

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