Bitcoin and Crypto Market Face US Inflation Challenge as Trump Tariff Concerns Ease

Bitcoin BTC $89 962 24h volatility: 1.0% Market cap: $1.80 T Vol. 24h: $55.77 B and the broader crypto market bounced back following yesterday’s strong selling pressure as Trump has finally decided to back off from EU tariffs from Feb. 1. On Jan. 22, top altcoins like Ethereum ETH $3 012 24h volatility: 1.8% Market cap: $363.50 B Vol. 24h: $34.34 B , Solana SOL $130.0 24h volatility: 2.1% Market cap: $73.70 B Vol. 24h: $5.41 B , and Dogecoin DOGE $0.13 24h volatility: 2.0% Market cap: $21.37 B Vol. 24h: $1.34 B have also registered recoveries from yesterday’s bottom.

This move helped in curbing the crypto market volatility, as liquidations topped $900 million yesterday, triggered by a global risk-off shift triggered by Trump’s warnings toward Europe. However, inflation could be a major challenge for Bitcoin and the crypto market moving ahead.

US Inflation Could Be Next Challenge for Bitcoin and Crypto Market

Although concerns around the US tariffs are easing, risk-on assets are still not completely out of the woods. Sticky inflation could pose a major challenge to BTC and crypto assets, as per economists, who point out that US living costs could accelerate this year. With the Senate Banking Committee prioritizing housing legislation, the crypto bill has also taken a backseat recently.

In a new research note, Peterson Institute for International Economics President Adam Posen and Lazard CEO and Chairman Peter R. Orszag said US consumer prices could come in stronger than expected in 2026, potentially rising above 4%.

This could also hold the Fed from opting for future interest rate cuts. Last week, JPMorgan Global Research said that it expects the US Fed to keep rates unchanged through 2026, maintaining the policy rate in the 3.5% to 3.75% range.

Posen and Orszag said inflation could be pushed higher by multiple forces, including Trump’s proposed tariffs on imports and a tighter labor market. This could eventually push the risk-on investors to the edge.

Crypto Market Faces Both Short and Long Liquidations

Over $600 million in leveraged crypto positions were liquidated over the past 24 hours, according to CoinGlass data. The losses spread almost evenly between long and short trades across roughly 138,000 market participants.

The on-chain data shows that more than $300 million in liquidations happened on both sides. Liquidations were concentrated on major exchanges, with Binance recording about $120.8 million in forced closures, largely driven by long positions. Bybit saw nearly $95 million liquidated, with longs again slightly exceeding shorts.

The shakeout followed sharp intraday volatility in Bitcoin, which briefly dipped below $88,000 before recovering toward the $90,000 mark.

Another key factor impacting the market activity is the recovery in Japan’s long-term government bonds, which helped ease global borrowing costs. This has potentially eased the pressure on Bitcoin and other digital assets.

Crypto markets remain closely tied to moves in bond yields. Another sharp rise in rates could quickly renew downside pressure across bitcoin and the broader digital-asset market.

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