Trump's change in attitude triggers gold retreat; the market logic behind the easing of risk aversion in the crypto market

Spot gold short-term decline of about $40 to $4845.07 per ounce, driven by the rapid easing of geopolitical risks. Trump stated he would not use force to seize Greenland, which changed market expectations of conflict escalation, leading safe-haven funds to start withdrawing from gold and other defensive assets. This turning point is crucial, marking the end of the extreme panic sentiment in the market over the past two days.

The Complete Logic of Risk Easing

48 Hours from Risk Rise to Relief

On January 19, Trump threatened to impose a 10% tariff on eight European countries, triggering market panic. This not only impacted the crypto market but also boosted demand for safe-haven assets like gold. The market reaction was quite intense:

During this period, gold became the preferred safe-haven asset. But just two days later, Trump backtracked, saying he would not use force, instantly changing the market’s assessment of geopolitical risks. Safe-haven demand immediately receded, and gold prices declined accordingly.

Why is the market so sensitive

According to relevant analysis, several overlapping risk factors underlie this volatility:

• Uncertainty over the Fed Chair nomination (expectations shifting from “dove” to “hawk”)
• Greenland dispute and US-Europe tariff friction
• Crypto-friendly bill CLARITY encountering obstacles in the Senate

These factors collectively increased market risk premiums. When Trump’s statement eliminated the most urgent geopolitical concerns, the accumulated safe-haven sentiment was quickly released.

Signal of Gold Retreat to Crypto Markets

What does easing safe-haven sentiment mean

The decline of gold as a traditional safe-haven asset reflects a recovery in market risk appetite. This is a positive signal for the crypto market because:

• Funds may flow back from gold into risk assets
• Long positions may see reduced forced liquidation pressure
• Market sentiment could gradually recover from extreme panic

However, it’s important to note that this does not mean an immediate rebound. According to relevant information, Matrixport’s analysis shows that current crypto traders are more inclined toward “range trading” rather than chasing breakouts, indicating the market is still cautious.

The “TACO Trading” Pattern in Trump Policies

Some analysts suggest Trump’s tariff threats might be just negotiation tactics (market calls this the “TACO trade,” meaning Trump retreats at the last minute). The typical pattern is: weekend tough talk → market panic then calm → government officials come out to soothe → eventual agreement.

If this logic holds, the current decline may only be a first phase of relief, and further negotiations or policy clarifications need to be observed.

What to Watch Next

Based on current information, several key points warrant ongoing attention:

• Final confirmation of the Fed Chair candidate (Powell’s term ends May 15; Trump said he will announce a successor this month)
• Follow-up developments in US-Europe tariff negotiations
• Senate vote on the crypto-friendly bill CLARITY
• Whether market sentiment can further stabilize or will fluctuate again

Summary

The $40 drop in gold may seem small but reflects a rapid adjustment in market risk expectations. Trump’s statement that he will not use force is a significant attitude shift, easing concerns over escalating geopolitical conflicts. For the crypto market, this could mean the previous extreme panic sentiment is receding, but a genuine rebound requires more policy certainty. Currently, it’s more of an observation period, with markets waiting for the final results of Fed Chair nominations and US-Europe tariff negotiations. For investors, it’s a gradual process of recovering rationality from extreme safe-haven fears, but caution is advised as Trump’s policies remain unpredictable.