Trump's Davos "soothing" speech reverses the market: increased certainty in crypto policies

Trump’s speech in Davos tonight successfully reversed the market pessimism of the past two days. He explicitly stated that there will be no military action against Greenland and reiterated his support for the cryptocurrency industry. Under the influence of these remarks, the US stock and cryptocurrency markets experienced an “immediate” rebound, sharply contrasting with the intense flash crash on Monday morning.

From Panic to Rebound: Market Effects of the Speech

Market background before the speech

On Monday morning, the crypto market experienced a rapid decline. Bitcoin dropped from $95,500 to $91,900 in less than an hour, with a maximum decline of 3.79%, and the market saw a total liquidation of $864 million. The direct trigger for this flash crash was Trump’s weekend comments about Greenland, followed by escalating US-European tariffs. The market was generally worried that geopolitical risks would worsen further, putting pressure on risk assets.

Three core points of Trump’s speech

According to BlockBeats’ summary, tonight’s speech covered three key topics:

Trump emphasized during the speech that the statement on Greenland was “the most important statement I have made,” and said “yesterday’s decline in US stocks is nothing, the market will double.” Market analysis generally believes that this rhetoric was mainly aimed at calming the US stock market that fell on Monday. In terms of actual effect, this strategy indeed worked — US stocks and cryptocurrencies subsequently rebounded.

Increased Certainty in Crypto Policy

Progress in Congressional Legislation

Trump revealed during the speech that Congress is actively drafting legislation to structure the crypto market, covering various crypto assets including Bitcoin. He expects to sign the bill soon, opening a new development path for the American people. This not only confirms the stance towards the crypto industry but also provides a timetable for policy advancement.

From the market reactions over the past two days, such signals of policy certainty have a much greater impact on market sentiment than geopolitical fluctuations. When policy uncertainty dissipates, markets are more willing to reassess the value of crypto assets.

Stability of Policy Tone

Compared to last year, the current policy environment shows clear stability. According to HTX DeepThink’s analysis, the core logic of the crypto market this week is the phased easing of political uncertainty, with macro data regaining market pricing power. The game between Trump and the Federal Reserve has cooled down, and the market generally believes that related investigations are unlikely to have substantial impact.

Logical Shifts Amid Market Volatility

Why did gold rise while Bitcoin fell?

Interestingly, during the escalation of tariffs, gold and silver hit record highs, while Bitcoin declined. This reflects an important market perception: Under current geopolitical tensions, Bitcoin is still viewed as a risk asset rather than a safe haven asset.

This means that the market’s pricing logic for cryptocurrencies depends more on changes in risk appetite than on safe haven demand. When geopolitical risks rise, risk assets come under pressure; when policy certainty improves, risk assets rebound. Trump’s speech tonight effectively alleviated geopolitical uncertainty, thereby boosting market risk appetite.

The rising importance of macro data

According to the latest market analysis, this week’s key variables are the re-pricing of the rate cut path based on inflation and growth data, including core PCE, PMI initial figures, and revised GDP data. If inflation remains sticky and economic resilience shows, expectations for rate cuts may continue to shift further away, putting pressure on high-beta alternative assets, while Bitcoin is more likely to maintain high-level oscillations.

Future Focus

Market impact of the Fed Chair appointment

Trump mentioned during the speech that a new Fed Chair will be announced soon but did not specify a candidate. He described the candidate as a “respected male” and also expressed concerns about the new chair potentially “betraying” him. This reflects Trump’s ongoing focus on the Fed’s independence. Bond market analysis indicates that if the appointment is perceived as overly compliant, the bond market will quickly punish the US. This variable remains a key point to watch.

Actual progress of crypto legislation

Although Trump said the bill is expected to be signed soon, the actual progress in Congress remains to be seen. Any delays or modifications during the legislative process could impact market expectations.

Summary

Trump’s Davos speech reversed market sentiment through two key signals: first, a clear statement that there will be no military action against Greenland, easing geopolitical risks; second, reaffirming support for crypto and revealing legislative progress, enhancing policy certainty. The immediate effect of this speech demonstrates that, in the current market environment, policy certainty has surpassed geopolitical fluctuations in influencing crypto assets.

However, whether this rebound can be sustained depends on subsequent macro data and the concrete outcome of the Fed Chair selection. In the short term, markets may continue to oscillate at high levels with high volatility. For traders, the key is to distinguish between structural opportunities driven by policy signals and short-term emotional swings.