Crypto Calm Returns as Tariff Fears Subside, Bitcoin Volatility Eases

Crypto markets steadied Thursday after Wednesday’s tariff-induced volatility, with bitcoin reclaiming the $90,000 mark as equities rebounded and traders rotated back into risk assets.

Bitcoin (BTC) traded between $89,300 and $90,200 during Asian hours following the sharp swings triggered by U.S. President Donald Trump’s tariff-related comments on Wednesday. Tensions between the U.S. and European Union came to a head in Davos, with Trump initially easing fears over Greenland and later canceling plans to impose EU tariffs, driving both equities and crypto higher in what has been dubbed the “taco trade.”

The rebound highlights how closely crypto continues to track equity markets, while gold’s pullback from record highs suggests traders are moving capital from safe-haven assets back into risk-on positions. Ether (ETH) traded near $3,000, up 0.86% since midnight UTC, reflecting broader gains across the altcoin market.

Derivatives and Market Positioning
Wednesday’s swings triggered roughly $593 million in liquidations across crypto derivatives, impacting long and short positions equally during bitcoin’s drop to $87,200 and its subsequent recovery.

BTC’s 30-day implied volatility fell from 44.3 early Wednesday to 40.62, signaling a cooling of options market hedging demand. Open interest for bitcoin dropped 0.34% over the past 24 hours while the price rose 0.84%, reflecting profit-taking on short positions amid modest futures demand on the buy side.

Funding rates across most crypto pairs remain positive, indicating a general bullish bias. Axie Infinity (AXS) is an exception, showing negative funding rates after a 126% rally over the past week. The long/short ratio for bitcoin, measuring the number of accounts going long versus short, rose to 2.04 from last week’s 1.18, further signaling bullish sentiment.

Altcoins and Sector Highlights
Metaverse tokens led the altcoin market, with The Sandbox (SAND) climbing 10.8% in 24 hours as traders rotated profits from Axie Infinity’s rally. CoinDesk’s Metaverse Select Index (MTVS) rose 6.58% since midnight UTC and 50.8% year-to-date, outperforming other benchmarks and signaling growing bullish interest in blockchain gaming.

Privacy tokens, in contrast, lagged: Dash (DASH) fell 2.8% and Night (NIGHT) dropped 4.4% over 24 hours, while Monero (XMR) and Zcash (ZEC) declined 27% and 17%, respectively, over the past week.

The decentralized finance (DeFi) sector remains resilient, with stablecoin-dominated total value locked (TVL) continuing an uptrend dating back to 2023, contrasting with the previous cycle when TVL surged to $176 billion before collapsing below $50 billion in months.

CoinMarketCap’s “altcoin season” indicator rose from 26/100 to 29/100 overnight, driven by gains in metaverse tokens and major cryptocurrencies XRP and BNB, both up around 2.5%, compared with bitcoin’s 0.74% rise.