Trump's Policy Moves and Fed Chair Speculation Trigger Crypto Flash Crash

Original | Odaily Planet Daily (@OdailyChina)

Author | Wenser (@wenser 2010)

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

After Bitcoin (BTC) briefly rose above $97,000 last week, its weekly close ultimately settled above $95,000. However, just as the market had hoped BTC would lead a broader recovery in the cryptocurrency market, a long-awaited sharp pullback hit again. Within just a few hours, BTC briefly fell below $92,000, currently trading around $92,750; Ethereum (ETH) briefly dropped below $3,200, currently trading at around $3,213; and Solana (SOL) quickly fell below $140, currently trading around $133.Coinglass DataAccording to the data, in the past 4 hours, the market saw $593 million in liquidations, with long positions accounting for as much as $566 million. The number of liquidated traders in the past 24 hours reached as high as 238,400.

And the main trigger for this "Black Monday" might still be a series of controversial moves by Trump.

As the "heart of the American economic lifeline," the Federal Reserve has long played the role of a "hand of God" in the U.S. and even the global economic system, wielding monetary authority, enjoying an independent status, and maintaining a detached attitude. The person who leads the Federal Reserve—the Chair of the Federal Reserve—thus becomes the most critical figure behind this "hand of God." As the current Chair, Jerome Powell, is about to leave office, the nomination of a new Chair is of vital importance and is therefore regarded as a "barometer of the market."

Previously, Kevin Hassett, an economic adviser to the White House, was considered a top candidate due to his "pro-Trump" stance and "dovish" attitude in favor of interest rate cuts. However, Trump has not provided clear statements. Recently, the list of potential nominees for the new Federal Reserve chair has been narrowed down to four individuals: Christopher Waller, a current member of the Federal Reserve Board; Kevin Warsh, a former board member; Rick Rieder, an executive at BlackRock; and Hassett. Recommended reading:FED's "Leadership Change" Countdown: Revealing the 5 Top Candidates, Who Will Be the Final Winner?.

andThe latest news shows thatHassett may have already dropped out, while Kevin Walsh's chances have surged. White House economic adviser Kevin Hassett said that President Trump is likely to keep him in his current role, which would remove him from the running for the next Federal Reserve chair. Last week, Trump expressed reservations about nominating Hassett to replace current Fed Chair Jerome Powell. At an event at the White House, Trump told the director of the National Economic Council, "To be honest, I actually hope you stay in your current position." Hassett, speaking about the White House on Sunday, said, "There are many excellent candidates, and the president is likely to make the right decision, believing that my current position here is the best place for me." He expressed being "flattered and grateful" for Trump's comments about his future, calling the president "a really good man." Recommended reading:"Is the 'Strict Principal' of BTC Coming? If He Takes the Helm at the Fed, the Crypto Party Might Come to an Abrupt End".

After Trump's speech, traders on the prediction market website Kalshi increased the probability of Walsh obtaining the position to 60%, while Hassett and Waller had probabilities of only 16% and 14%, respectively. Traders on Polymarket also showed similar dynamics, with 60% support for Walsh, 15% for Hassett, and 13% for Waller. Previously, Walsh and Hassett had been closely matched in terms of their chances.

Powell's term as Chair of the Federal Reserve will end on May 15. The selection process is led by U.S. Treasury Secretary Bentsen. Interestingly, last night, U.S. Treasury Secretary Bentsen...External representation"Trump is committed to ensuring the independence of the Federal Reserve. We have four excellent candidates for the position of Federal Reserve Chair. The Senate is expected to be satisfied with the appointment of any one 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 is about to complete his first year in office, the market may not yet have developed sufficient resilience to cope with his indecisive and inconsistent approach, leading to a significant drop in confidence in the cryptocurrency market, which directly caused a market flash crash.

On the other hand, from the perspective of the global economic situation as a whole, unstable factors are also continuing to increase.

Greenland Becomes a Political Focus in Europe and the US, Tariff Issues Resurface

As a major enclave of the European Union, Greenland has long been regarded as Denmark's "backyard" by the Nordic country. However, this status may now be about to undergo a sudden change.

Last May, Trump once boldly claimed thatIt does not rule out "seizing the island by force."Possibility; and half a year later, at the beginning of this year, this bold statement was once again echoed by White House Press Secretary Levert.ReaffirmDiscussions are currently underway regarding the purchase of Greenland. The option of seizing Greenland by force is not ruled out, and all possibilities are under consideration.

After the declaration of "raiding the Venezuelan presidential palace and capturing Maduro," this public statement undoubtedly caused some alarm and tension not only in Greenland and several European Union countries, but also globally.

Previously, the Trump administration once consideredPouring money to persuade the Greenlanders to separate from Denmark and "join" the United States., while the cost is a one-time payment of $10,000 to $100,000 for 57,000 Greenlanders.It must be said that, in the eyes of Trump, who has never acted by conventional logic, politics always boils down to an "economic calculation."

Ultimately, this "Greenland crisis" evolved from a territorial dispute into a "high-tariff trade war"—on January 18, Trump...Made a high-profile post statingDue to issues related to Greenland, since February 1st of this year, the United States has imposed a 10% additional tariff on all goods exported to the U.S. from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland. The U.S. also plans to increase the tariff rate to 25% on June 1st.The aforementioned tariff measures will continue to be implemented until an agreement is reached on the "comprehensive and complete purchase of Greenland," fully demonstrating a resolute attitude that can be described as "not giving up until the goal is achieved."

Affected by this news, several European Union countries are considering imposing tariffs on $93 billion worth of American goods imported into Europe.

Last April, the same "tariff trade war" was first initiated by Trump, and now, this factor remains a key influence on the cryptocurrency market and the global economy.

In addition, Trump's move is not only about a "territorial dispute," but also carries a strong flavor of an "economic counterattack."

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

January 15, U.S. President TrumpIssue a public statement indicatingThe EU's imposition of huge fines on U.S. tech companies is extremely unfair and represents a discriminatory act against the excellence of American technology and taxation.Relevant data shows that in 2024, the total fines imposed by the European Union on U.S. technology companies reached 3.8 billion euros, while the total income tax paid by all listed European internet technology companies during the same period was only 3.2 billion euros.Currently, U.S. tech giants such as Apple, Google, and Meta are all facing billions of euros in fines or back-tax rulings from the European Union. It is evident that Trump has long been dissatisfied with the EU's "tough policies" regarding economic sovereignty.

In addition to macro-level influencing events, the stalled CLARITY Act, which is closely related to the cryptocurrency market, may have also contributed to the sudden increase in selling pressure and the sharp price crash.

Viewpoint: Delays in the U.S. Senate's Cryptocurrency Market Structure Bill Heighten Regulatory Uncertainty, Pressuring Related Assets

Alex Thorn, Head of Research at Galaxy Digital Previously stated,The postponement of the U.S. Senate Banking Committee's scheduled hearing on the cryptocurrency market structure bill highlights deepening divisions between Congress and the industry on several key issues, particularly focusing on stablecoin yield mechanisms and DeFi-related provisions.

This postponement occurred hours after Coinbase CEO Brian Armstrong withdrew his support for the bill. Armstrong publicly opposed the bill's language regarding tokenized securities, DeFi restrictions, and stablecoin yields. Following this, Senate Banking Committee Chair Tim Scott announced the postponement of the hearing, though a new schedule has yet to be released. With the Senate adjourning next week, the earliest possible resumption may 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, and stakeholders continued to discover new points of contention at the last minute, significantly increasing the difficulty of political coordination. In terms of the market, after the news of the delay was announced, crypto assets generally declined, with Bitcoin and Ethereum falling by about 2% on that day. Related U.S. stocks also faced downward pressure, with Coinbase dropping 6.5%, Robinhood falling 7.8%, and Circle declining 9.7%.

It argues that while there is already a significant consensus on the "market structure" itself, politically difficult-to-cross fault lines have formed around non-core yet highly sensitive issues such as stablecoin yields, DeFi compliance, and granting the SEC regulatory tools in the area of tokenized securities. "The apparent differences on the surface may not be large, but the underlying chasm is deep."

Previously, several tokenization companies, including Securitize, Dinari, and Superstate, made statements opposing Coinbase's opposition to the CLARITY Act.Expressing disagreementFor more details, please read the following:"CLARITY Review Suddenly Postponed—Why Is the Industry So Divided?".

Last weekend, trader Eugene was on his personal channel.Expressing through a postDue to the underperformance of relevant investment assets, we have chosen to secure profits in stages. We have already largely exited our long positions in altcoins. However, our core long position in Bitcoin is still held, and we have significantly increased our cash position to await the next round of trading opportunities.

As BTC rebounds above $97,000 after fluctuating within the $85,000–$90,000 range, considering high-risk factors such as expectations of macroeconomic interest rate cuts, global political and economic conditions, and the rising prices of precious metals like gold and silver, locking in profits may be the best choice.

From this perspective, the cryptocurrency market's pullback may continue in the short term. Whether it can retrace the bull market trajectory again might once again, just like last year, depend solely on Trump's "TACO-style performance."