Trump’s Tariffs Play Is Back, but Crypto Traders Fade Greenland Takeover

Key Takeaways:

Prediction markets show there’s only a 20% chance the U.S. will take over Greenland this year.

It comes after Trump threatened Europe with 25% tariffs for opposing the annexation of Greenland

Analysts say prediction markets are not always accurate.

Donald Trump’s threat of punitive tariffs against Europe rattled markets this week and sent Bitcoin lower, but crypto traders are not confident the U.S. President’s controversial plan to acquire Greenland will materialize.

Trump said on Jan. 17 the U.S. would impose 10% tariffs on goods from eight European countries for opposing the annexation of self-governing Danish territory, Greenland. The tariffs will increase to 25% on June 1.

Denmark, Finland, France, Germany, Norway, the Netherlands, the United Kingdom and Sweden – all longtime allies of the United States in NATO – would face the tariffs starting February 1, Trump wrote on Truth Social.

The move renewed fears of widening trade disputes and triggered a sell-off in risk assets. Bitcoin has tanked nearly 7% since the announcement, and the S&P 500 fell 2% on Tuesday, extending losses from a day earlier.

Prediction Markets Under the Spotlight

However, prediction markets tell a different story. Polymarket data shows there’s currently only a 20% chance the U.S. will acquire Greenland by Dec. 31, 2026, and a 30% chance by Mar. 31 this year.

The data suggests crypto traders see the plan as unlikely despite Trump’s repeated political rhetoric, but analysts warn that thin liquidity, regulatory uncertainty in some cases and speculative behaviour can distort prices.

“Prediction markets have shown growing traction in forecasting political outcomes, but they are not always accurate,” said Illia Otychenko, lead analyst at crypto exchange CEX.io, in an interview with Cryptonews.

“They can be best viewed as an additional signal rather than a definitive measure. They can help gauge sentiment and probability, but their figures should not be taken at face value without broader context.”

Crypto-based prediction markets have seen massive growth in recent years, with the sector expected to have reached about $40 billion in transaction volume at the end of 2025, up more than 400% from a year earlier.

At this pace, the sector is set to rival the $300 billion global sports betting industry in 2026, analysts say, driven by regulatory clarity in the U.S., institutional buy-in and a change in how the public consumes information.

The sector, which is dominated by Polymarket and Kalshi, is going from a crypto-native niche to mainstream. Real-world events like politics, sports, culture, and economic indicators are now tradable financial instruments.

During recent U.S. election cycles, Polymarket reported a surge in volume as users bet on outcomes ranging from presidential races to interest rate decisions.

Georgii Verbitskii, founder of crypto yield platform Tymio, said prediction market prices “reflect a consensus on probabilities, not directional bets by crypto traders.” But he also believes that the markets have “matured into fairly reliable tools for assessing political risk,” telling Cryptonews:

“The low odds assigned to extreme outcomes like a Greenland takeover suggest participants are distinguishing political noise from realistic scenarios, and doing so with reasonable accuracy.”

Greenland Tariffs: Short-Term Shock, Limited Fallout

Analysts say the crypto market’s reaction to Trump’s latest tariffs aligns with patterns seen during previous tariff-driven volatility, where cryptocurrencies initially sold off alongside equities before finding a foothold.

“So far, the market reaction looks more like short-term volatility rather than a structural macro shift,” said Otychenko, the CEX.io lead analyst.

“The impact is smaller than what we saw in early March 2025, when U.S. steel and aluminum tariffs triggered EU countermeasures. At that time, price volatility was largely localized,” he added.

Otychenko said similar behaviour could play out again, “with brief risk-off moves rather than a sustained trend change, unless the confrontation escalates into a more critical conflict.”

Bitcoin has built a reputation as a gold-like store of value, but the top cryptocurrency continues to behave like a high-risk asset during periods of geopolitical uncertainty, often moving in line with stocks as traders cut exposure.

Trump’s tariff threat is a return to the protectionist policies that defined much of his first presidency, when levies on Chinese goods and European metals elicited retaliation and contributed to bouts of market turbulence.

His renewed focus on Greenland, a territory of 55,000 people in the Arctic, adds a geopolitical twist. Trump first proposed to purchase Greenland in 2019, but Denmark declined.

The territory holds strategic value due to its location along emerging shipping routes and reserves of rare earth minerals, which are used in defence industries and clean energy tech, according to observers.

While Trump frames his interest in Greenland as a matter of “national security”, analysts predict any acquisition would face major political and legal barriers. Some European countries have already deployed military troops to defend Greenland against any potential takeover by the U.S.

“A potential Greenland takeover would carry much broader geopolitical consequences,” Otychenko said, adding:

“Trump also has a history of stepping back from some high-stakes scenarios, which helps explain the low odds seen on prediction platforms.”

Bitcoin’s Long-Term Outlook Intact?

Some experts say Bitcoin’s long-term trajectory is tied less to trade wars and more to macroeconomic forces such as central bank policy, inflation trends and institutional adoption.

“Generally speaking, I’d expect the Bitcoin price to respond to tariffs and market volatility by first declining in the short-term,” John Haar, managing director at Swan Bitcoin, told Cryptonews.

“But after the short-term reaction, market participants realize that the tariffs ultimately do not affect Bitcoin’s trajectory as much as other factors such as central bank policy, government spending, inflation, and adoption, all of which continue to be supportive of Bitcoin.”

Not everyone agrees with Haar’s assessment. Tymio’s Verbitskii said, at the moment, Bitcoin is structurally weak. “There’s a clear lack of sustained demand from large buyers,” he noted.

“In that environment, any risk-on event, including renewed tariff rhetoric from Donald Trump, tends to push BTC lower very quickly. Markets are treating these headlines more as short-term volatility triggers than as a fundamental macro shift, but the sensitivity itself is telling.”

Verbitskii added that, “Until structural demand returns and the market regime changes, geopolitical shocks are more likely to add downside pressure than reinforce Bitcoin’s hedge narrative.”

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