Why did Bitcoin rise today? Trump's cancellation of the tariff plan sparks a rebound in risk assets

January 22, Bitcoin rebounded to $89,878, up 1.68%. Trump canceled tariffs on Europe, driving a surge in US stocks, and risk asset appetite rebounded; Davos calls for crypto legislation, both positive catalysts. However, Wall Street warns to be cautious before BTC recovers to $98,000.

Trump’s Tariff Cancellation Sparks Risk Asset Rally

The primary reason for Bitcoin’s rise today is Trump’s sudden announcement to cancel tariff plans, completely reversing market sentiment. On Wednesday, Trump issued a statement on Truth Social stating that he and NATO Secretary General Jens Stoltenberg “have formed a framework for future agreements related to Greenland,” and that based on the negotiations, he will cancel the punitive tariffs on European goods scheduled to start on February 1.

In the statement, Trump said: “Based on a very productive meeting with NATO Secretary General Jens Stoltenberg, we have established a framework for future agreements regarding Greenland, and indeed the entire Arctic region. If this plan is implemented, it will be a major positive for the United States and all NATO countries. Based on this understanding, I will no longer implement the tariffs originally scheduled to take effect on February 1.”

This sudden policy shift immediately triggered a strong market reaction. The Dow Jones Industrial Average surged nearly 770 points, up about 1.6%; the S&P 500 rose 1.6%; the Nasdaq Composite increased 1.8%. Tech stocks like Nvidia and AMD led the rally, with capital flowing back into previously reduced growth stocks.

Along with improved risk sentiment, the “Sell US” trade that impacted the market on Tuesday reversed on Wednesday: 10-year US Treasury prices rose, yields fell from 4.3%; the dollar index also rebounded. More dramatically, spot gold once dropped nearly $100, spot silver fell over $3, and spot platinum and palladium also dipped sharply. This sharp correction in safe-haven assets signals a clear shift toward risk appetite.

As a typical risk asset, Bitcoin naturally benefited from this sentiment reversal. When US stocks surged, Treasury yields fell, and gold tumbled, capital reallocated into high-risk, high-return assets, and Bitcoin fits this profile. The quick rebound from around $88,000 to $89,878, a 1.68% increase, directly reflects this capital flow.

Market Impact of Trump’s Policy Shift

US stocks soar: Dow up nearly 770 points, tech stocks lead, capital flows back into growth stocks

Safe-haven assets plunge: Gold drops nearly $100, silver down over $3

US Treasury yields fall: 10-year yield retreats from 4.3%

Bitcoin benefits: Risk appetite revival pushes BTC from $88,000 to $89,878

Senior Portfolio Strategist Tom Garretson of RBC Wealth Management said before Trump announced the tariff suspension that the market was somewhat betting “if tariffs threaten to cause too much negative impact, the government might choose to back down.” Now that this bet has materialized, the market naturally responded with a big rally.

Trump’s Davos Crypto Legislation Outlook

The second key reason for Bitcoin’s rise today is Trump’s clear support for cryptocurrencies at the World Economic Forum in Davos. Trump stated he is working to “ensure the US remains the world’s crypto capital,” and revealed that “Congress is working on legislation to structure the crypto market… I hope to sign the bill soon.”

This statement boosted hopes for a broader regulatory framework. A clear regulatory environment has long been seen as a key obstacle for crypto industry mainstreaming, and Trump’s commitment suggests this obstacle may soon be removed. For institutional investors, clarity in regulation is a prerequisite for large-scale crypto asset allocation.

However, the path is not smooth. The bill faced setbacks last week, with Coinbase withdrawing support before a key hearing. Coinbase CEO Brian Armstrong pointed out that the draft contains “too many issues,” including amendments he believes “would stifle stablecoin incentives” and provisions allowing banks to “ban competitors.”

On Wednesday, data from Polymarket showed the probability of Congress passing crypto market structure regulation by 2026 is 40%, down from 80% on January 12. This decline indicates waning confidence in the legislative process. Nonetheless, Trump’s public stance as President still injects optimism into the market, at least confirming that the White House’s support for crypto remains unchanged.

Trump also mentioned pushing Congress to implement a “10% cap on credit card interest rates,” which boosted bank stocks, with Citigroup and First Capital rising about 1% at times. This financial reform agenda, combined with crypto legislation progress, forms part of Trump’s “Financial Modernization” plan.

From a macro perspective, Trump’s support for crypto is not accidental. His family business reportedly made over $1 billion in profits from crypto-related activities in the past year. While this overlap of personal interests and policy has sparked conflicts of interest concerns, it also ensures continued White House friendliness toward the crypto industry.

Wall Street Warns Caution, Technical Concerns Persist

Despite clear catalysts for Bitcoin’s rise today, Wall Street analysts issued cautious warnings. Compass Point analyst Ed Engel said this trend could signal a short-term bearish indicator. In a report Tuesday night, Engel stated: “Before Bitcoin recovers to the short-term holder’s average cost basis (currently $98,000), we remain cautious about chasing the rally.”

This warning is based on a key observation: Bitcoin has fallen about 8% since rebounding from $98,000 last week. This means many short-term holders who bought at high levels are currently at a loss, creating selling pressure when prices rebound. Only when prices re-approach $98,000 and these short-term holders break even will selling pressure ease.

Fundstrat Digital Asset’s Sean Farrell also expressed concern about recent volatility, noting that Bitcoin giant MicroStrategy (MSTR) bought about $2.13 billion worth of tokens over the past eight days but failed to sustain a significant rally. “When these large inflows cannot maintain upward momentum, it’s not a good sign,” Farrell said.

This insight is very perceptive. Strategy is one of the most aggressive Bitcoin buyers; large-scale purchases often support prices. Yet, $2.13 billion in buying volume has not pushed prices higher, indicating strong selling pressure. It may suggest many holders are using the rebound to offload.

Meanwhile, 10X Research offers a relatively optimistic view: “Bitcoin still looks constructive; we continue to see recent pullbacks as buying opportunities, leaning bullish.” But they also set a clear stop-loss: “If prices fall below $87,000, our current outlook will be invalidated, marking a painful retreat in the rebound attempt.”

Technical Analysis: Pullback, Not Collapse

(Source: Trading View)

From a technical perspective, analyzing why Bitcoin rose today and the potential future trend, the chart reflects a complex situation with short-term resistance and long-term strength coexisting. On the 2-hour chart, Bitcoin’s price outlook is bearish because BTC broke below a multi-week rising trendline and fell below the 50-day and 200-day moving averages, which are currently between $92,300 and $93,300, forming resistance.

Resistance in the supply zone at $95,600 to $96,000 is very strong, shown by a strong bearish candle, indicating distribution rather than consolidation. This distribution pattern suggests many holders are selling in this zone, creating a solid resistance band.

Support levels are around $87,000 to $85,900, consistent with previous consolidation and demand zones. The Relative Strength Index (RSI) has fallen to about 25, entering oversold territory, indicating downward momentum is weakening but no bullish divergence yet. The typical scenario is a short-term rebound to $89,800–$90,000, followed by consolidation, or if sellers continue to defend this zone, prices may test lower levels again.

Key Technical Levels

Immediate Resistance: $89,800–$90,000 (short-term rebound target)

Major Resistance: $92,300–$93,300 (50-day and 200-day moving averages)

Strong Resistance Zone: $95,600–$96,000 (distribution area)

Key Support: $87,000–$85,900 (break below triggers larger correction)

After a dismal Q4 last year, Bitcoin has erased most of its gains this year. This weakness indicates that despite Trump’s policy positives and Davos’s calls, the internal supply-demand structure remains tilted toward sellers.