TACO trading reappears: When Trump's "Coward Game" becomes a fatal swing in the crypto market.

Introduction

On October 11, 2025, the cryptocurrency market experienced a historic bloodbath, with various crypto assets plummeting overnight. Bitcoin flashed a drop of 15%, while Ethereum fell more than 20%. Many altcoins saw declines exceeding 70%. According to Coinglass data, within just 24 hours, the total liquidation amount reached $19.3 billion, affecting over 1.67 million investors—resulting in a more than $500 billion evaporation of the global cryptocurrency market capitalization, setting a new record in the crypto space.

Data source: Conglass, Date: October 11, 2025

The trigger for this storm is widely attributed to a post by U.S. President Trump on social media—claiming to impose a 100% tariff on all Chinese goods. However, as the script often repeats itself, after a period of extreme market panic, Trump quickly shifted his tone, signaling that he would engage in talks with China. Market sentiment also warmed after the sharp decline, with Bitcoin recovering above 11,000 and mainstream cryptocurrencies generally rebounding by over 10%.

This is not a random market fluctuation, but yet another classic enactment of the strategy known by seasoned traders as “TACO” (Trump Always Chickens Out). Bitget Wallet Research will take you through an in-depth analysis of the origins and developments of this strategy in this article, and explore how it continues to stir the global financial markets, including cryptocurrencies.

1. Analysis of “TACO”: A coward's game that the market has “seen through”

The so-called “TACO” strategy, which stands for “Trump Always Chickens Out,” translates literally to “Trump always backs down at the critical moment.” This term was first introduced by Financial Times columnist Robert Armstrong to summarize Trump's volatility in major decisions, especially regarding tariff policies. The core logic is that when policies trigger severe market fluctuations or economic pressures, the U.S. government often quickly retreats.

Source: Trump Truth Social post (left shows Trump threatening to increase tariffs, right shows Trump's easing stance).

The “TACO” strategy usually presents a clear market transmission channel:

Release extreme threats → Trigger panic selling in the market → Retrieve threats on the brink of market collapse → Market rebounds with vengeance

For traders, this nearly transparent script creates huge volatility and gives rise to unique trading patterns. Every panic-induced drop may be viewed by savvy speculators as an excellent buying opportunity, betting that Trump will not actually “pull the trigger.” This pattern is not an isolated case; looking back at history, we can clearly see its continuously repeating shadow.

2. Echoes of History: The Script Has Long Been Written

This high-risk game is not the first of its kind. Over the past few years, from the US-Mexico trade dispute to the US-China trade friction, traces of the TACO strategy can be seen everywhere, and various assets have followed suit, forming a highly regularized reaction pattern.

Data Description: The data in the table is compiled based on publicly available historical information. Due to the fact that policy release times are generally based on Eastern Time (ET), and there are differences in statistical caliber, the data is approximate and is only intended to reflect the basic trends of the market.

Based on comprehensive historical data, we can clearly see that: as a representative of economic fundamentals, the movement of the Dow Jones Index directly reflects the market's immediate expectations, decreasing when threats arise and recovering after easing signals appear; gold plays a key role as a safe haven, with its price showing a clear negative correlation with market risk appetite; in most cases, cryptocurrencies represented by Bitcoin are classified as high-risk assets, with their price fluctuations highly correlated with U.S. stocks, and the magnitude is more intense, demonstrating a significant “leverage effect.”

However, it is more noteworthy that as this script is repeatedly staged, the market has begun to show two subtle yet profound changes.

Firstly, the market's response pattern has evolved from passive reaction to proactive anticipation. A key piece of evidence is that in recent events, when signals of easing were issued, gold prices did not retreat as they did in the past; instead, they maintained high levels. This indicates that the market's concerns over the long-term credibility of policies and uncertainties have surpassed the optimism brought by short-term benefits. The trend of Bitcoin also confirms this, as its price had already risen in advance before the easing news was announced, digesting the expectations of a reversal, which resulted in a weakened upward momentum when the positive news was implemented. This shows that traders have learned to “jump the gun,” making the game more anticipatory and complex.

Secondly, the event highlights the complex dual attributes of Bitcoin at its current stage, with its role dynamically oscillating between “risk asset” and “digital gold.” Although in the early stages of market panic, Bitcoin often fell along with U.S. stocks, exhibiting pure risk asset characteristics. However, its independent hedging function has also occasionally surfaced, such as in August 2019, when it ignored the downturn of U.S. stocks and instead surged significantly alongside gold. This inconsistency in behavior indicates that Bitcoin's market attributes are far from being fixed; how it responds to geopolitical shocks depends on the prevailing market consensus, capital flows, and the nature of the shock event— and this oscillation itself is one of its most core characteristics at present.

( III. The New Normal of the Crypto Market: When “Tweet Governance” Becomes the Alpha of the Crypto World

The repeated performance of the “TACO” strategy is profoundly reshaping the ecology of the cryptocurrency market and pushing its inherent high volatility to a new extreme.

The most direct impact of this strategy is a comprehensive upgrade in the dimensions of market gaming. Value analysis based on project fundamentals or on-chain data has not become ineffective, but above that, a high-frequency macro gaming battlefield dominated by “tweets” and “headline news” is quietly taking shape and occupying an increasingly important position. Notably, the main players in this new battlefield have expanded from the former crypto-native KOLs and whales to traditional financial (TradFi) capital holding significant funds, as well as public figures with substantial social influence. This reflects not only a change in the identity of participants but also a clear signal of the accelerated integration of the crypto market into global macro narratives.

In this new dimension, the structural opportunities and risks in the market are magnified simultaneously. The popularity of algorithmic trading has intensified the market's “knee-jerk reaction”; programmatic models can capture information and execute large-scale operations in milliseconds, making the instant “waterfall” and “rocket” market trends on price charts increasingly common. A tweet in the middle of the night can trigger hundreds of millions of dollars in derivative chain liquidations at dawn in the Asian market—this is both the ultimate manifestation of risk and an arbitrage window that must inevitably emerge under the new structure.

However, what really needs to be contemplated is: what impact will this unique “wolf is coming” effect have in the long run?

As traders gradually adapt to this “threat-reversal” script, the market's initial reaction to similar negative news is becoming increasingly muted, with declines often accompanied by resilient buying. However, this conceals a unique and significant risk in the crypto market: once an extreme policy is truly implemented without subsequent easing, investors who are accustomed to counter-trend operations may face devastating blows due to inadequate preparation, leading to a spiral collapse of the market.

Looking to the future, it is foreseeable that as long as this political game of creating crises to gain leverage continues to exist, “TACO trading” will not disappear. Traders will focus more on seeking short-term opportunities in this predictable volatility, thereby shaping sharper “V-shaped reversal” patterns. At the same time, as the market's understanding of this model deepens, the game will become more complex, and simple reversals may evolve into more difficult-to-predict composite patterns. In this context, the key to success in the market will no longer be determining the direction of trends, but rather predicting the timing of “reversals.”

) 4. Navigating the “Trump Noise”: Survival Rules for Investors

In the face of such a volatile market, how should investors position themselves? First, one must respect leverage and control risk. The “TACO” market is a “meat grinder” for high-leverage contract traders, where any high-leverage position can instantly go to zero in extreme market conditions driven by news. Reducing leverage and maintaining sufficient margin is the primary survival rule for navigating volatility. Second, learn to filter out the noise and return to common sense. Rather than being obsessed with predicting when the next reversal will happen, it is better to take a long-term perspective and focus on the long-term value of projects. In times of panic, considering whether the current situation is about “discounted quality assets” or “falling knives” is far more important than staring at candlestick charts. Finally, from a practical standpoint, ensure proper asset allocation and achieve diversified hedging. Do not put all your eggs in one basket; appropriately allocate assets of different risk levels in your investment portfolio as an effective buffer against unknown risks.

Conclusion: Uncertainty is the only certainty.

Essentially, the “TACO” strategy is a projection of geopolitical games onto the financial markets. From trade wars to the bloodbath in the crypto market, it repeatedly proves that in today’s highly interconnected world amplified by social media, the words of a single individual can stir up tremendous waves in global markets. This also reminds us that what drives the market is not just cold economic data, but also the unpredictable nature of human emotions such as greed and fear.

For every investor involved, recognizing and understanding this pattern may not guarantee victory in every battle, but at least it can help maintain clarity during storms and make more rational decisions. Because in this era, the greatest certainty may be the uncertainty brought about by macro politics itself.