Trump ruled out tariffs against European nations: impact on Bitcoin and risk markets

Source: CritpoTendencia Original Title: Trump ruled out tariffs against European nations Original Link: During his participation in the World Economic Forum in Davos this Wednesday, U.S. President Donald Trump ruled out the tariffs he had threatened European countries with. In his words, the Republican magnate offered a tone of détente to try to calm the nerves of his trading partners.

Despite this, European leaders are not happy and are discussing response strategies to Washington’s threats. Major business groups from the old continent are pressuring EU authorities to take a firmer stance. This includes serious retaliatory measures against what they call blackmail.

Although the U.S. leader toned down his threats, his goal of taking over Greenland has not changed at all. This keeps Europeans on high alert. This includes imposing drastic measures so that a possible invasion of the Danish island would have severe economic consequences for the North American country.

As can be seen, this is a complex context that could trigger a trade war in the Western Hemisphere. The consequences for cryptocurrencies and stock market shares in the U.S. and Europe could be enormous.

Initial Bitcoin Reaction

Bitcoin’s initial reaction so far is upward. The currency gains +0.45% in 24 hours after it was announced that Trump ruled out tariffs, at least temporarily. With this, the largest cryptocurrency settled near the $90,000 per unit mark.

Are Trump’s new tariffs really ruled out?

Probably, everyone knows the answer to this question. The U.S. president constantly changes his mind, making his actions unpredictable. This suggests that at any moment he could threaten to impose sanctions on European countries again. Probably, this caused Bitcoin’s recovery this Thursday to be significantly limited and not exceed $90k.

All of this will depend on the stance European leaders take regarding Greenland. For now, it is unlikely that these nations will change their minds, suggesting that a trade clash seems inevitable. Trump assured he would not undertake military actions against the island, but those words cannot be considered a guarantee.

All of this is well known to crypto investors worldwide, especially whales and institutional players. Consequently, the climate of uncertainty becomes a brake for those capitals to flow into risk assets. What seems clear is that investors intend to buy cryptocurrencies in large quantities but are only holding back due to the geopolitical context.

At this point, the million-dollar question arises: will tensions worsen or will there be détente? As long as Trump does not abandon his intentions to take over Greenland, a favorable outlook for investing in cryptocurrencies or other risk assets cannot be expected.

Massive Bond Sell-Off by the EU

The worst-case scenario of this episode is that, after the invasion of Greenland, Europeans impose sanctions against the U.S. This would trigger an immediate reaction from Trump to impose very severe tariffs.

As is well known, the U.S. has critical cards to damage old continent countries, especially in defense and security. However, Europeans also have ways to strike back. Recent reports indicate that Europeans are planning a massive dumping of $1.7 trillion in Treasury bonds.

This could wreak havoc on the desperate plans led by Scott Bessent to lower bond yields. These yields are tied to elements such as mortgage rates, meaning that the massive sell-off could weaken the real estate market and create a phased crisis.

This probable sale would be mixed with declining demand for Treasury bonds, which has been at a multi-year low. In fact, the gap between international gold reserves and U.S. debt holdings is narrowing more and more.