Trump orders crackdown on Venezuela, the truth behind the short-term pressure on the crypto market

At 14:00 Beijing time on January 3rd, a massive explosion was reported in Caracas, the capital of Venezuela, followed by air raid sirens. Power supply in an area near a large military base in the southern part of the city was interrupted. U.S. officials subsequently confirmed that President Trump had ordered strikes against targets within Venezuela, including military facilities. This escalation triggered a short-term correction in the crypto markets. However, the underlying logic behind this is far more complex than it appears—on one hand, a sudden release of geopolitical risks; on the other, the tension between the Trump administration’s long-term support policies for the crypto market.

How Geopolitical Shocks Are Transmitted to the Crypto Market

The Direct Impact of the Event

The explosion in Venezuela marks a new phase in the Trump administration’s pressure campaign against Maduro’s regime. According to the latest reports, this was an intensified pressure action by the Trump administration early Saturday morning. Sudden military conflicts often lead to a concentrated sell-off of global risk assets, with the crypto market—being a 24/7 high-liquidity market—often serving as a preferred outlet for risk-averse funds.

Recent information indicates that the sensitivity of cryptocurrencies to macroeconomic policies and geopolitical events has significantly increased since early 2026. This means even regional conflicts can trigger chain reactions across the global crypto market. Market participants tend to sell risk assets first to lock in profits or cut losses amid uncertainty.

Why Now

From a timing perspective, this geopolitical shock is not entirely unexpected. Analysis suggests that market uncertainty caused by Trump’s tariff policies has been accumulating, reducing market tolerance for geopolitical risks. Coupled with the US debt surpassing $40 trillion and ongoing global central bank sales of US Treasuries, the overall market remains highly sensitive. In such an environment, any sudden event can easily trigger a concentrated sell-off.

The Dual Nature of Trump’s Policies: Support and Risks Coexist

Long-term Benefits for Crypto

It’s important to clarify a key background point: the Trump administration itself has shown support for cryptocurrencies. According to recent reports, the Federal Reserve has revoked the pre-approval process for banks’ crypto activities, and the U.S. government is even planning a “Strategic Bitcoin Reserve.” U.S. banks have also been allowed to freely buy and sell cryptocurrencies. Additionally, Amir Zaidi, a CFTC official who previously pushed for Bitcoin futures approval, has returned to the agency as chief of staff.

These policy signals indicate that crypto assets are moving from the “regulatory fringe” toward the “financial mainstream.”

But Geopolitical Risks Are a New Variable

However, Trump’s proactive foreign policy stance introduces a new risk factor. Analysis suggests that if a major geopolitical shock occurs—such as worsening European tensions or escalation of regional conflicts—all economic forecasts could become invalid. This means that while the crypto market benefits from policy support, it is also exposed to geopolitical risks.

The Venezuela incident can be seen as a real-world manifestation of this risk.

Macro Background: Market Fragility Under US Debt Crisis

Stablecoins as a Key Variable

Recent reports indicate that stablecoins have become significant players in the US debt market. USDT holds over $100.7 billion in US Treasuries, and USDC holds about $40 billion. This signifies a deep integration between the crypto market and traditional finance. When geopolitical shocks trigger a sell-off in global risk assets, liquidity pressures on stablecoins will also rise, impacting overall crypto pricing.

Changes in Liquidity Environment

Under the backdrop of the US debt crisis, central banks worldwide are reducing their holdings of US Treasuries. While this environment benefits the crypto market’s long-term safe-haven appeal, in the short term it still faces the impact of risk asset sell-offs. Especially during sudden geopolitical events, markets tend to price in risks first and then react, leading to intense short-term volatility.

Short-term Fluctuations vs. Long-term Trends

Personal Viewpoint

This correction may be a “false alarm.” The reasons are:

First, the framework of support policies from the Trump administration for crypto has not changed. Although geopolitical events trigger short-term sell-offs, they do not alter the overall policy direction.

Second, the long-term pressure from the US debt crisis remains, meaning investors will ultimately seek value storage outside the dollar. Crypto assets still play a role within this framework and are not weakened.

Third, the continuous inflow of institutional funds (such as persistent net inflows into Bitcoin spot ETFs) provides price support. Short-term emotional swings are unlikely to change long-term capital allocation decisions.

Future Focus Points

• Will the Venezuela situation continue to escalate, potentially triggering larger risk asset sell-offs?
• Will the Trump administration continue to promote crypto-friendly policies to offset geopolitical risks?
• What is the trend in the US debt market, especially regarding stablecoin liquidity pressures?
• Will global central banks’ responses trigger a new round of risk asset revaluation?

Summary

This recent correction in the crypto market essentially reflects the tension between geopolitical risks and policy support. In the short term, the market needs to digest the uncertainties brought by the Venezuela incident. But from a longer-term perspective, Trump’s support policies for crypto, the US debt crisis’s impact on safe-haven demand, and ongoing institutional inflows continue to underpin the long-term direction of the crypto market.

The key point is that short-term volatility triggered by geopolitical events does not alter the medium-term trend. Investors should remain vigilant but avoid overreacting. Especially in the current macro environment, excessive risk aversion could cause missed opportunities for larger gains.