Tariff risk mitigation triggers market rebound, but the crypto market is still waiting for confirmation signals

The Situation Suddenly Cools Down

Global risk sentiment has shifted significantly in a short period. U.S. President Trump confirmed that the U.S. will suspend the planned tariffs on EU goods set for February 1, following preliminary coordination with NATO on Greenland and broader Arctic security issues. This statement quickly alleviated one of the most prominent geopolitical uncertainties since the beginning of the year. According to reports from Reuters and Bloomberg, Trump emphasized that the U.S. would not use economic or military coercion against Europe over the Greenland issue, but rather place it within a strategic dialogue aimed at containing Russian and Chinese influence in the Arctic region. The market generally interpreted this stance as a significant reduction in short-term trade and security risks.

The response from traditional financial markets was swift and clear. U.S. stocks experienced a notable "risk recovery" rally, with the Dow Jones Industrial Average rising about 1.2%, and both the S&P 500 and Nasdaq Composite indices increasing by approximately 1.1%. The chip sector led the gains, with AMD's single-day increase exceeding 7%. This rebound is widely viewed as a concentrated unwinding of defensive positions established around tariff uncertainties, and its trajectory has been clearly reflected in the U.S. stock closing data.

Predictive Markets Price In Advance

It is noteworthy that the market repricing did not entirely begin before the official statement. Even before Trump officially spoke, the probabilities of contracts related to "U.S.-EU tariffs implementation" and "Greenland-related escalation risks" on the decentralized prediction market Polymarket had already declined rapidly, indicating that speculative funds were betting on a de-escalation rather than an escalation of the situation.

Data from Polymarket shows that the implied probability of U.S.-EU tariffs being implemented in the short term significantly decreased within hours. This change in probability provided the market with a political expectation signal ahead of traditional news channels, prompting some traders to adjust their cross-asset allocation direction, effectively serving as a "pre-signal" for the subsequent rebound in stocks and risk assets. This event once again highlights the new role of predictive markets in pricing political risks, with their speed of change often outpacing that of spot markets and even having the potential to influence short-term price behavior in the opposite direction.

Crypto Market Reaction is Cautious

In contrast, the response from the crypto market has been noticeably more restrained. Bitcoin, which had previously dipped below $88,000 during the peak of tariff tensions, stabilized after Trump announced the tariff suspension but has failed to effectively break above the key psychological level of $90,000, instead entering a narrow fluctuation range. From the aggregated quotes of multiple exchanges, this trend reflects that the market is still digesting internal structural pressures.

This difference highlights the distinct pricing mechanisms between traditional risk assets and crypto assets. The stock market's response to the easing of trade frictions is often directly reflected in corporate earnings expectations and improvements in cross-border capital flows; whereas the crypto market is more constrained by liquidity, leverage willingness, and capital flows. During this rebound, Bitcoin still faced a backdrop of continuous outflows from spot ETF funds and weak leverage demand, which objectively limited the transmission effect of positive macro news.

Sentiment and Capital Flows Remain Conservative

Multiple indicators show that the crypto market is still in a "repair rather than reversal" phase. The crypto fear and greed index published by Alternative.me has dropped to 32, clearly within the "fear" range, indicating that investor sentiment has not yet returned to a positive state. Meanwhile, weekly data disclosed by CoinShares and several ETF issuers still show net outflows from Bitcoin spot ETFs, continuing the recent trend of price suppression.

Partial signals from the U.S. market are also weak. The Coinbase Bitcoin premium index has been negative for several consecutive days, meaning that buying interest in the U.S. has not significantly rebounded due to the easing of geopolitical risks. These data collectively point to one conclusion: while the decrease in macro uncertainty has alleviated downward pressure, it is still insufficient to trigger a trend reversal in the crypto market.

Easing is Not a Reset

In summary, the risk easing surrounding Greenland and EU tariffs resembles the removal of a "tail risk" rather than opening a new upward channel for the crypto market. Predictive markets successfully captured changes in political expectations in advance and influenced cross-asset allocation in the short term, but translating this probability improvement into sustained price increases still requires deeper supporting conditions, including improved liquidity, ETF fund inflows, and clearer policy and regulatory pathways.

At the current stage, the market presents a fragile balance: geopolitical pressures have temporarily decreased, but crypto assets remain caught between macro easing and internal structural constraints. Consequently, Bitcoin's movement resembles more of a consolidation and tug-of-war rather than immediately following traditional risk assets into a new upward trend.

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