Trump says stock market doubling cooled off: Tariff threats trigger crypto market flash crash

U.S. President Trump recently stated that the stock market’s decline is insignificant and that it will double. However, reality delivered a loud slap to the market. After Trump threatened tariffs on multiple European countries over the Greenland dispute, the crypto market experienced a flash crash on Monday morning, with Bitcoin briefly dropping below $93,000 and $864 million being liquidated within 24 hours. Meanwhile, gold hit a new all-time high, clearly reflecting the market’s genuine response to geopolitical risks.

The Contrast Between Words and Reality

Trump’s optimistic forecast stands in stark contrast to market performance. He claimed that the stock market’s decline “is nothing,” and predicted it would double. But the actual market reaction tells a different story.

Tariff Threats Are the Main Market Disruption

Trump’s dispute over Greenland is not unfounded. To pressure Denmark into selling Greenland, he threatened to initiate a trade war against multiple European countries.

Details of tariff threats

• Imposing 10% tariffs on 8 European countries starting February 1
• Planned increase to 25% in June
• The EU is considering retaliatory tariffs on $108 billion worth of U.S. goods

Chain reaction in the market

These tariff threats immediately impacted European companies heavily reliant on the U.S. market. On Monday morning, European automakers’ stocks plummeted:

• Mercedes-Benz down 6.7%
• BMW down 7%
• Volkswagen down 5.4%

These companies export a large number of cars and parts to the U.S. and are already under profit pressure due to Trump’s previous tariff policies.

Why Is the Crypto Market the Weakest?

Compared to gold reaching a new high, Bitcoin’s decline was even larger, reflecting an important market perception: cryptocurrencies are still viewed as risk assets rather than safe-haven assets.

Reasons for market divergence

During escalating geopolitical tensions, traditional safe-haven assets (like gold) are in demand, while high-beta assets (like Bitcoin) are sold off. According to relevant analysis, hawkish signals in trade tend to boost the dollar, putting pressure on Bitcoin.

Complexity of the macro environment

HTX Research’s analysis indicates that the current crypto market is in a transitional phase of “macro stabilization and data disturbance.” Although Trump’s previous attempt to pressure the Federal Reserve Chairman cooled amid opposition in the Senate, new tariff risks have once again become a market focus. Key inflation data this week, such as core PCE and PMI preliminary figures, may lead to re-pricing of rate cut expectations, further impacting high-beta assets.

What to Watch Next

Whether Trump’s optimistic statements will materialize largely depends on the progress of US-EU trade negotiations. If the tariff war truly escalates, U.S. consumer prices could rise by more than 0.15%. Berenberg Bank’s chief economist pointed out that this could lead to more severe actual losses for U.S. consumers.

From the crypto market perspective, key areas to monitor include:

• Latest developments in US-EU trade negotiations
• Release of key macroeconomic data this week
• Further evolution of geopolitical risks

Summary

Trump’s optimistic prediction of a doubling in the stock market has cooled, not because his words lack credibility, but because the reality of escalating tariff risks continues to intensify. The flash crash in crypto markets reflects investors’ genuine concerns over the escalation of trade wars. At this stage, markets are more focused on whether US-EU tariff negotiations can avoid the worst-case scenario, rather than long-term growth potential. The divergence between gold and Bitcoin also reminds us that, in the face of risk events, the safe-haven attributes of crypto assets remain limited, and their performance is more influenced by the overall global risk sentiment.