"Black Monday" Strikes Again, Is Trump Once Again the "Flash Crash Engine"?

Original | Odaily (@OdailyChina)

Author | Wenser (@wenser 2010)

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

After BTC briefly climbed above $97,000 last week, it ultimately closed the week above $95,000. Just as the market was anticipating BTC to lead a broader crypto market recovery, a long-absent "significant correction" struck again—within just a few hours, BTC plummeted below $92,000, currently trading around $92,750; ETH fell below $3,200, currently around $3,213; SOL quickly dropped below $140, currently around $133. Coinglass data shows that over the past 4 hours, the market saw liquidations totaling $593 million, with long positions accounting for a staggering $566 million. Over 24 hours, the number of liquidated traders reached 238,400.

The primary trigger for this "Black Monday" is likely, once again, a series of maneuvers by Trump.

Sudden Shift in Fed Chair Nomination: "Dovish" Hassett Possibly Out, "Hawkish" Kevin Warsh's Odds Surge

As the "heart of the U.S. economic lifeline," the Federal Reserve has long played the role of the "invisible hand" in the U.S. and global economic systems due to its monetary privilege, independent status, and detached stance. The individual chosen to lead the Fed is the most critical figure behind this "invisible hand." As current Chair Jerome Powell's term nears its end, the nomination of the next chair is of paramount importance and is thus seen as a "market barometer."

Previously, White House economic advisor Kevin Hassett was considered a frontrunner due to his "pro-Trump" and "pro-rate-cut" dovish stance, but Trump had not given a clear indication. Recently, the shortlist for the next Fed Chair has narrowed to four: Fed Governor Christopher Waller, former Governor Kevin Warsh, BlackRock executive Rick Rieder, and Hassett. Recommended reading: 《Fed "Leadership Change" Countdown: Unveiling the 5 Major Candidates, Who Will Be the Final Winner?》.

However, the latest news indicates that Hassett may be out, while Kevin Warsh's odds have skyrocketed. White House economic advisor Kevin Hassett stated that Trump is likely to keep him in his current position, which would remove him from contention for the next Fed Chair. Last week, Trump expressed reservations about nominating Hassett to succeed current Fed Chair Powell. During an event at the White House, he told the National Economic Council director: "To be honest, I actually want you to stay where you are." Hassett, speaking about the White House on Sunday, also said: "There are many excellent candidates, and the President will likely make the right decision that my best place is here (the White House) for now." He felt "honored and grateful" for Trump's comments about his future, calling the President "a really good man." Recommended reading: 《BTC's "Strict Principal" Arriving? If He Takes the Helm at the Fed, the Crypto Party Could Grind to a Halt》.

After Trump's remarks, traders on the prediction market site Kalshi raised the probability of Warsh getting the job to 60%, while Hassett and Waller's chances were only 16% and 14%, respectively. Traders on Polymarket showed similar dynamics, with Warsh at 60%, Hassett at 15%, and Waller at 13%. Previously, Warsh and Hassett's odds were neck and neck.

Powell's term as Fed Chair ends on May 15. The selection process is led by U.S. Treasury Secretary Bessant. Interestingly, last evening, Treasury Secretary Bessant publicly stated: "Trump is committed to safeguarding the Fed's independence. We have four excellent candidates for Fed Chair. I believe the Senate would be satisfied with any of these four candidates."

Previously, Trump said he would appoint Powell's successor this month but did not provide a specific date. As Trump approaches his one-year anniversary in office, the market may still lack sufficient resilience to cope with his vacillating approach, leading to a sharp decline in crypto market confidence and directly causing the flash crash.

Trump's "Tariff War Hat-Trick": Greenland Dispute, EU-U.S. Tariff War

On the other hand, looking at the global economic landscape, unstable factors continue to increase.

Greenland Becomes a Political Focus for US and Europe, Tariff Storm Reignites

As a significant exclave of the EU, Greenland has long been considered Denmark's "backyard." Now, this status quo may face a sudden change.

Last May, Trump boldly stated that he would not rule out the possibility of a "military takeover" of the island. Half a year later, at the beginning of this year, this bold statement was reiterated by White House Press Secretary Levitt: Discussions are currently underway regarding the purchase of Greenland. A military seizure of Greenland is not off the table; all options are being considered.

Following the "lightning strike on the Venezuelan presidential palace and the capture of Maduro," this foreign policy statement undoubtedly sent shivers down the spines of Greenland, multiple EU nations, and countries worldwide.

Previously, the Trump administration once considered offering money to persuade Greenlanders to break away from Denmark and "join" the U.S., with the price being one-time payments of $10,000 to $100,000 to Greenland's 57,000 residents. It must be said that in the eyes of Trump, who has never played by conventional rules, 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 loudly proclaimed that, due to issues related to Greenland, starting February 1st of this year, the U.S. will impose an additional 10% tariff on all goods exported to the U.S. from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, with plans to raise the rate to 25% on June 1st. These tariff measures will remain in effect until an agreement is reached for the "complete and thorough purchase of Greenland." This demonstrates his resolute attitude, akin to "not stopping until the goal is achieved."

In response to this news, several EU nations are considering imposing tariffs on $93 billion worth of U.S. goods exported to Europe.

In April of last year, a similar "tariff trade war" was initiated by Trump, and now, this factor remains key to influencing the crypto market and the global economy.

Furthermore, Trump's move is not just about "territorial dispute"; it also carries a sense of "economic counterattack."

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

On January 15, U.S. President Trump publicly stated that the EU's massive fines on U.S. tech companies are extremely unfair and constitute discriminatory actions targeting superior American technology and taxation. Relevant data shows that in 2024, the total fines imposed by the EU on U.S. tech companies reached €3.8 billion, while the total corporate income tax paid by all European-listed internet tech companies during the same period was only €3.2 billion. Currently, U.S. tech giants like Apple, Google, and Meta are facing multi-billion euro fines or tax rulings from the EU. It's evident that regarding economic sovereignty, Trump has long been dissatisfied with the EU's "high-pressure policy."

"Crypto-Friendly Bill" Hitting Roadblocks May Be a Potential Factor in Market Decline: CLARITY Faces Consensus Crisis

Apart from macro-level influencing events, the obstruction of the CLARITY bill, closely related to the crypto market, may have also contributed to the sudden surge in selling pressure and the price flash crash.

Viewpoint: U.S. Senate Crypto Market Structure Bill Delayed, Regulatory Uncertainty Heats Up, Related Assets Under Pressure

Alex Thorn, Head of Research at Galaxy Digital, previously stated that the U.S. Senate Banking Committee's scheduled review meeting for the crypto market structure bill has been postponed, highlighting deep-seated disagreements between Congress and the industry on several key issues, particularly focusing on stablecoin yield mechanisms and DeFi-related provisions.

This delay occurred just hours after Coinbase CEO Brian Armstrong withdrew his support for the bill. Armstrong publicly opposed the bill's language concerning tokenized securities, DeFi restrictions, and stablecoin yields. Senate Banking Committee Chairman Tim Scott subsequently announced the postponement of the hearing but has not yet released a new schedule. With the Senate in recess next week, the earliest possible resumption is between January 26th and 30th.

Alex Thorn pointed out that within just 48 hours, the bill draft 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. On the market front, following the announcement of the delay, crypto assets generally declined, with Bitcoin and Ethereum falling about 2% that day; related U.S. stocks also faced pressure, with Coinbase down 6.5%, Robinhood down 7.8%, and Circle down 9.7%.

He believes that although consensus has largely been reached on "market structure" itself, issues surrounding stablecoin yields, DeFi compliance, and granting the SEC regulatory tools in the tokenized securities space—non-core but highly sensitive topics—have created a difficult-to-cross political divide. "The surface gap in disagreements is not large, but the substantive chasm is deep."

Previously, several tokenization companies including Securitize, Dinari, and Superstate refuted Coinbase's statements opposing the CLARITY bill. For more details, recommended reading: 《CLARITY Review Suddenly Postponed, Why Is Industry Disagreement So Severe?》.

Summary: Correction May Continue, Traders Taking Profits in Stages

Last weekend, trader Eugene stated on his personal channel that due to the market performance of related investment targets not meeting expectations, he chose to take profits in stages and has now largely exited altcoin long positions. However, his core Bitcoin long positions are still held, while cash positions have been significantly increased to await the next trading setup.

With BTC rebounding from the $85,000-$90,000 consolidation range to above $97,000, considering factors like macro rate cut expectations, global political and economic conditions, and price increases in precious metals like gold and silver, taking profits might be the best choice.

From this perspective, the correction in the crypto market may continue in the short term. Whether it can resume its bull market trajectory, perhaps like last year, we may still have to pin our hopes on Trump's "TACO-style performance."