Bitcoin briefly climbed above $90,000 on 21 January after President Donald Trump de-escalated tensions over Greenland during his Davos speech.
The rally followed a volatile move that saw bitcoin jump from around $88,200 to nearly $90,300 within three hours.
Market sentiment had weakened earlier after Trump threatened a 200% tariff on French wine, pushing bitcoin down from $95,000 to near $88,000.
Trump also referenced cryptocurrency during his World Economic Forum address in Davos, fuelling short-term optimism for pro-innovation regulation.
The gains quickly faded, with bitcoin sliding back to about $87,200 within hours.
The sharp reversal triggered more than $210 million in liquidations across leveraged positions in four hours.
The sell-off in crypto mirrored broader risk aversion as volatility hit global equity markets.
Investors were rattled by turmoil in Japan’s government bond market, where long-dated yields spiked by over 25 basis points in one session.
US Treasury Secretary Scott Bessent and Japanese Finance Minister Katayama Takayuki reportedly issued joint statements to stabilise markets.