U.S. Treasury Secretary Scott Bessent’s remarks at the World Economic Forum in Davos reignited trade-war inflation concerns and triggered an immediate market sell-off, with cryptocurrencies taking substantial losses. The comments — and a concrete timetable for possible tariffs — amplified risk-off flows across digital assets, equities and bonds.
Markets moved sharply after Bessent framed tariff threats as a near-term policy option. Crypto exchanges recorded roughly $1.09 billion of liquidations during the 24 hours after his remarks, with about 92% linked to long positions. Bitcoin fell below $90,000 and Ethereum traded under $3,000. Major tokens such as ETH, SOL and ADA declined by roughly 5% in the immediate repricing.
Risk-off extended to traditional markets. Nasdaq and S&P 500 futures fell about 1%, and the Dow dropped more than 870 points as bond markets also sold off. The combined reaction underlined crypto’s correlation with broader risk assets during episodes of geopolitical stress rather than any safe-haven behavior.
Policy row, rhetoric and economic mechanics
Bessent urged allied countries not to retaliate and warned the administration could impose a 10% tariff as early as February 1 if Denmark and others did not cooperate on Greenland. He told allies to “sit back, take a deep breath, do not retaliate,” while stressing the strategic importance of the island to U.S. defence plans.
European Commission President Ursula von der Leyen called the tariff proposals a “mistake” and the European Parliament moved to suspend ratification of a key trade deal with the U.S. French officials signalled potential use of the EU’s Anti-Coercion Instrument as a countermeasure.
The rhetoric and immediate policy moves raised clear inflationary risks: tariffs operate like a consumption tax on imports, pushing up consumer prices, reducing household liquidity and dampening speculative inflows into volatile assets.
Analysts in Davos quantified the hit: a threatened 10% tariff translates into a measurable drag on activity — the estimate cited in the session implied about a 0.1% reduction in Eurozone GDP — amplifying the macroeconomic cost of the dispute.
Investors and product teams will now focus on the February 1 deadline for a potential 10% tariff as the next concrete test of policy risk. If tariffs materialize or rhetoric intensifies, liquidity and correlations across crypto and traditional markets are likely to remain stressed, forcing asset managers and compliance teams to reassess hedging, custody exposure and stress scenarios for portfolios.
