Bitcoin Reacts to Trump’s Greenland Tariff Threat

Bitcoin reacts to Trump’s Greenland tariff threat.

Trump's announcement regarding tariffs on certain European nations has caused a dip in Bitcoin prices, while prediction markets remain skeptical about the chances of any real territorial acquisition. Analysts emphasize the importance of macroeconomic and structural demand for Bitcoin.

Key Takeaways:

Former President Trump proposed a 10% tariff on goods from eight European nations in response to their opposition to the annexation of Greenland.
The tariffs are set to increase to 25% by June 1, prompting a selloff in risk assets, including Bitcoin.
Prediction markets show a low probability of the U.S. acquiring Greenland, suggesting a disconnect between political risk and Bitcoin's structural demand.
While Bitcoin behaves like a volatile asset amid geopolitical concerns, analysts advise that its long-term trajectory hinges on broader economic factors rather than just trade tensions.

Trump’s Greenland Tariff Announcement Puts Bitcoin Under Pressure

On January 17, former President Donald Trump declared that the U.S. would impose a 10% tariff on imports from Denmark, Finland, France, Germany, Norway, the Netherlands, the United Kingdom, and Sweden—countries opposing the annexation of Greenland, an autonomous territory of Denmark. This tariff will rise to 25% beginning June 1.

The announcement fueled a selloff across various risk assets, with Bitcoin dropping nearly 7% and the S&P 500 index losing 2% on the day of the announcement, continuing a downward trend from previous sessions.

Prediction Markets Show Low Confidence in Greenland Acquisition

Despite the tariff impact on Bitcoin, prediction markets depict skepticism regarding the potential annexation of Greenland. According to data from Polymarket, there’s only a 20% chance that the U.S. will acquire Greenland by December 31, 2026, and a 30% chance by March 31 of this year.

“Prediction markets can be interesting for gauging political sentiment, though their accuracy can be questionable,” said Illia Otychenko, chief analyst at crypto exchange CEX.io. He highlighted that these markets should be viewed as supplementary indicators rather than definitive predictions, emphasizing that external factors like regulatory issues and speculative activities can skew their reliability.

Growth and Maturity of Crypto Prediction Markets

The realm of crypto-based prediction markets has flourished over the past few years, with estimates suggesting that transaction volumes have reached around $40 billion by the end of 2025—an increase of over 400% compared to the previous year. Analysts predict that this sector could rival the $300 billion global sports betting market by 2026, fueled by clearer regulations in the U.S. and broader institutional involvement.

Platforms like Polymarket and Kalshi dominate the landscape and have broadened their appeal to include a wider audience beyond crypto enthusiasts. Events in politics, sports, culture, and economic metrics have become tradable forecasts. For instance, during recent U.S. elections, Polymarket recorded a surge in activity as participants bet on various election outcomes.

Georgii Verbitskii, founder of the crypto yield platform Tymio, remarked that prediction market prices represent consensus probabilities rather than speculative bets from crypto investors. He noted that such markets have matured into reliable instruments for understanding political risks, indicating that the low odds of extreme outcomes like the Greenland takeover reflect rational assessments of feasible scenarios.

Bitcoin's Response to Tariffs and Market Volatility

Therefore, Bitcoin's response to Trump's tariff announcement is consistent with historical patterns seen during previous instances of tariff-related market volatility. Analysts have observed that cryptocurrencies typically sell off alongside equities before finding stability.

Otychenko commented, “Currently, this market reaction seems to be more indicative of short-term volatility than a significant macroeconomic shift. The recent impact is less severe than what we observed back in March 2025 when U.S. tariffs on steel and aluminum led to countermeasures from the EU, resulting in localized price fluctuations.”

He also stated that a similar pattern could emerge again, with transient risk-averse reactions rather than a sustained trend shift—unless the political situation escalates dramatically.

Bitcoin has gained a reputation as a safe haven asset akin to gold. However, it still behaves like a high-risk investment during geopolitical unrest, often moving in alignment with stock performance as investors reduce their risk exposure.

Broader Implications of Trump's Tariff Strategy

Trump’s tariff threat marks a return to the protectionist strategies that defined much of his previous presidential term, during which tariffs on Chinese products and European metals led to retaliatory measures and market instability. Trump's prior interest in purchasing Greenland was made public in 2019, but Denmark rebuffed the offer.

Analysts assert that Greenland's strategic significance, with its sparse population of 55,000 positioned along key shipping routes and rich in rare earth minerals essential for defense and clean energy, adds complexity to any potential acquisition. Despite Trump's framing of the Greenland discussion as a matter of national security, experts suggest that significant political and legal hurdles would impede such actions. Reports also indicate that some European nations have relocated military forces to safeguard Greenland from prospective U.S. ambitions.

Otychenko noted, “Any attempt to acquire Greenland could have far-reaching geopolitical ramifications,” explaining that Trump has a history of backing away from high-stakes scenarios, which clarifies the low probability reflected in prediction markets.

Long-Term Outlook for Bitcoin Amid Geopolitical Tensions

Several analysts contend that Bitcoin's long-term prospects depend less on bilateral trade issues and are more closely tied to overarching macroeconomic elements like central bank policies, inflation trends, and institutional adoption.

John Haar, managing director at Swan Bitcoin, stated, “In the short term, I expect Bitcoin prices to dip in response to tariffs and market volatility. However, as participants digest the situation, they often realize that these tariffs have less impact on Bitcoin's future than factors such as central bank strategies, government spending, inflation, and adoption rates, which continue to favor Bitcoin."

Conversely, Verbitskii holds a different perspective, arguing that Bitcoin faces inherent challenges at this time. "We currently see a clear lack of consistent demand from major buyers," he explained. “Therefore, any risk-on development, including renewed tariff discussions from Trump, quickly exerts downward pressure on Bitcoin. Markets tend to interpret these headlines as triggers for short-term volatility rather than as signals of fundamental macro shifts, which itself indicates a concerning sensitivity.”

Verbitskii concluded, “Until we see a return of structural demand and a shift in market dynamics, geopolitical shocks are more likely to amplify downward pressure on Bitcoin than to reinforce its narrative as a hedge.”