Trump Reignites Tariff Storm, Cryptocurrency Market Faces Another 'Black Monday'

Original Title: "Black Monday" Strikes Again, Is Trump Once Again the "Flash Crash Engine"?

Original Author: Wenser, Odaily Planet Daily

Upon waking up, the crypto market once again experienced a "Monday-style flash crash."

After BTC briefly rose above $97,000 last week, its weekly close ended up above $95,000. Just as the market was expecting BTC to lead a overall crypto market recovery, a long-awaited "sharp correction" struck again — in just a few hours, BTC dropped below $92,000, currently trading around $92,750; ETH dropped below $3,200, currently trading at $3,213; SOL quickly dropped below $140, currently trading around $133. Coinglass data shows that $593 million was liquidated in the past 4 hours, with long liquidations totaling as high as $566 million; the number of liquidated accounts in 24 hours reached as many as 238,400.

And the main cause of this "Black Monday" might still be a series of Trump's maneuvers.

Unexpected Turn of Events in Fed's New Chair Nomination: "Dovish" Hassett Likely Out, "Hawkish" Kevin Warsh's Odds Soar

As the "heart of the U.S. economy," the Federal Reserve has always played the role of the "Invisible Hand of God" in the U.S. and even global economic system with its monetary privilege, independent status, and aloof attitude. The selection of the Fed's chairperson is the most crucial figure behind this "Invisible Hand of God." With current Chair Powell set to step down, the nomination of a new chair is crucial and is therefore seen as a "market indicator."

Previously, White House economic adviser Kevin Hassett was considered a hot contender due to his "pro-Trump" and "rate-cut support" dovish stance. However, Trump has not given a clear indication, and recently, the range of nominees for the new Fed chair has narrowed down to include Fed Governor Christopher Waller, former Governor Kevin Warsh, and BlackRock executive Rick Rieder, and Hassett.

However, the latest news indicates that Hassett may be out, while on the contrary, Kevin Warsh's odds are soaring. White House economic adviser Kevin Hassett stated that Trump is likely to let him remain in his current position, which would take him out of the running for the next Fed chair. Trump expressed reservations last week about nominating Hassett to succeed current Fed Chair Powell. At a White House event, he told the chairman of the Council of Economic Advisers, "To be honest, I really hope you can stay in your current position." Hassett also said last Sunday regarding the White House, "There are many excellent candidates, and the president is likely to make the right decision, believing that my best position is here now." He felt "surprised and grateful" for Trump's comments about his future, calling the president "a really good person."

After Trump's speech, traders on the prediction market website Kalshi increased the likelihood of Walsh getting the job to 60%, while Hassett and Waller's chances were only 16% and 14%, respectively. Polymarket traders also expressed a similar sentiment, with Walsh's support at 60%, Hassett at 15%, and Waller at 13%. Previously, Walsh and Hassett were evenly matched in winning odds.

Powell's term as Fed Chair will end on May 15. The selection process is led by US Treasury Secretary Besen. Interestingly, last night, US Treasury Secretary Besen stated externally: "Trump is committed to safeguarding the Fed's independence. We have four outstanding Fed Chair candidates. The Senate is expected to be satisfied with the election of any of these four candidates."

Previously, Trump stated that he would appoint Powell's successor this month but did not provide a specific date. As Trump approaches his first anniversary in office, the market may not have developed enough resilience to deal with Trump's ambivalent attitude, leading to a significant drop in crypto market confidence and a subsequent flash crash.

Trump's "Tariff War Hat Trick": Greenland Island Dispute, EU-US Trade War

On the other hand, from the perspective of the global economic situation as a whole, destabilizing factors are also increasing.

Greenland Island Becomes a Focus of EU-US Politics, Tariff Storm Resurfaces

As a major enclave of the EU, Greenland has long been regarded by Denmark as its "own backyard," but now, this situation may be undergoing a change.

In May last year, Trump once boasted that he did not rule out the possibility of "military invasion of the island"; and half a year later, earlier this year, this boast was reiterated by White House press secretary Levitt: the matter of buying Greenland is currently under discussion. Military seizure of Greenland is not ruled out, and all options are being considered.

Following the "Lightning Raid on the Venezuelan Presidential Palace, Arresting Maduro," this external statement undoubtedly caused some alarm among Greenland, multiple EU countries, and even global nations.

Previously, the Trump administration once considered spending money to persuade the people of Greenland to break away from Denmark and "join" the US, with the cost being a one-time payment of $10,000 to $100,000 to each of the 57,000 Greenlanders. It has to be said that, in Trump's historically unpredictable view, there is always an "economic calculation" behind politics.

Ultimately, the "Greenland Crisis" evolved from a territorial dispute into a "High Tariff Trade War." On January 18, Trump made a high-profile post, stating that starting from February 1 of this year, the U.S. will impose a 10% tariff on all goods exported to the U.S. from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland due to the Greenland issue, with plans to raise the tariff to 25% on June 1. The above tariff measures will continue until an agreement is reached on the "complete purchase of Greenland." Demonstrating a resolute attitude, it can be described as "no stopping until the goal is achieved."

Impacted by this news, several EU countries are considering imposing tariffs on $930 billion worth of U.S. goods exported to Europe.

In April of last year, a similar "tariff trade war" was initiated by Trump. This factor continues to be a key influence on the crypto market and even the global economy.

Furthermore, Trump's actions not only involve the "territorial dispute" but also carry a strong sense of an "economic counterattack."

Trump: EU's Huge Fines on U.S. Tech Companies Extremely Unfair

On January 15, U.S. President Trump posted online, stating that the EU's huge fines on U.S. tech companies are extremely unfair and discriminatory against U.S. outstanding technology and taxation. Relevant data shows that by 2024, the total fines imposed by the EU on U.S. tech companies will reach 38 billion euros, while the total income tax of all European publicly listed Internet technology companies during the same period is only 32 billion euros. Currently, U.S. tech giants such as Apple, Google, and Meta are facing fines or back tax rulings of billions of euros from the EU. It is evident that Trump's "high-pressure policy" towards the EU on economic sovereignty has been a long-standing issue.

"Crypto-Friendly Legislation" Faces Obstacles, Potential Impact on Market Decline: CLARITY Faces Consensus Crisis

In addition to the macro-level events, the CLARITY Act closely related to the crypto market facing obstacles may have provided some assistance to the sudden increase in selling pressure and price collapse in the market.

View: U.S. Senate Delays Crypto Market Structure Act, Regulatory Uncertainty Rises, Pressure on Related Assets

Galaxy Digital's Head of Research, Alex Thorn, previously stated that the U.S. Senate Banking Committee's scheduled hearing on the Crypto Market Structure Act has been postponed, highlighting deep-seated disagreements between Congress and the industry on multiple key issues, particularly focusing on stablecoin yield mechanisms and DeFi-related provisions.

The delay occurred after Coinbase CEO Brian Armstrong withdrew his support for the bill hours later. Armstrong publicly opposed the bill's wording on tokenized securities, DeFi restrictions, and stablecoin yields. Senate Banking Committee Chairman Tim Scott then announced a postponement of the hearing but has not yet announced a new schedule. Due to the Senate's recess next week, the earliest resumption could be between January 26 and 30.

Alex Thorn pointed out that within just 48 hours, the draft bill was released late at night, over 100 amendments were submitted, stakeholders continued to discover new points of contention at the last minute, and the political coordination difficulty significantly increased. On the market side, after the delay announcement, cryptocurrency prices generally declined, with Bitcoin and Ethereum falling by about 2% on the same day; related U.S. stocks also came under pressure, with Coinbase falling 6.5%, Robinhood falling 7.8%, and Circle falling 9.7%.

He believes that although there has been a largely consensus on the "market structure" itself, highly sensitive non-core but issues such as stablecoin yields, DeFi compliance, and giving the SEC regulatory tools in the tokenized securities field have formed a deep political rift that is difficult to bridge. "The surface gap of the discord is not large, but the substantive gap is very deep."

Previously, several tokenization companies such as Securitize, Dinari, and Superstate had rebutted Coinbase's opposition to the CLARITY Act.

Summary: Pullback Likely to Continue, Traders Taking Profits in Stages

Over the weekend, trader Eugene had previously posted in his personal channel, stating that due to the market performance of related investment targets not meeting expectations, he chose to take profits in stages, and has now mostly exited his altcoin long positions. However, his core Bitcoin long positions are still held, and he has significantly increased his cash position to await the next round of trading setups.

Considering the rebound of BTC from the $85,000 to $90,000 range to above $97,000, due to factors such as expectations of macro interest rate cuts, the global political and economic situation, and the rise in prices of precious metals such as gold and silver, taking profits may be the best choice.

From this perspective, the cryptocurrency market's pullback may continue in the short term, and whether it can return to the bull market trend may, like last year, still depend on hoping for a "TACO-style performance" from Trump.

Original Article Link