Bitcoin disregarded Trump’s recent 25% tariff warning, yet the $19 billion liquidation specter from October is subtly reemerging.

On January 12, President Donald Trump announced via Truth Social that the United States would implement a 25% tariff on any nation engaging in trade with Iran, with the measure being “effective immediately.”

Bitcoin (BTC) briefly fell below $91,000, but quickly rebounded to above $92,000 within hours. There was no cascade of liquidations, nor any systemic unwinding. The market absorbed what seemed to be a maximalist geopolitical announcement and continued onward.

At the time of publication, BTC was trading close to $94,000, reflecting a 1.5% increase in the last 24 hours.

Three months prior, a similarly phrased declaration, wherein Trump threatened a 100% tariff on China in October 2025, resulted in over $19 billion in forced liquidations and caused Bitcoin’s value to plummet by more than 14% in just a few days.

This disparity prompts a clear question: why did one tariff announcement disrupt the market while the other had minimal impact?

The explanation isn’t that traders have become desensitized to Trump’s statements. Rather, it’s that markets now evaluate policy announcements through a lens of credibility. Specifically, they assess the difference between a social media post and an actionable policy.

The January 12 announcement ranked low in both credibility and urgency, while the October 10 announcement scored high on both fronts and arrived in a market primed for a reaction.

Credibility gap

The White House did not release a corresponding executive order alongside Trump’s announcement on Truth Social. There was no notice in the Federal Register, nor any guidance from Customs and Border Protection that clarified what “doing business with Iran” would entail or which transactions would activate the 25% tariff.

Reports highlighted the lack of formal documentation and raised concerns over the ambiguous legal foundation.

This absence is significant because the Supreme Court is currently examining whether Trump’s application of the International Emergency Economic Powers Act (IEEPA) to impose tariffs oversteps presidential authority.

Lower courts have already determined that IEEPA tariffs exceeded allowable limits, and those rulings are currently on hold pending the Supreme Court’s decision.

At Polymarket, there’s only a 27% likelihood that the Supreme Court will uphold the tariffs, while Kalshi offers slightly higher odds at 31.9%.

Prediction markets indicate approximately 27-32% probability that the Supreme Court will support Trump’s tariff authority as of January 2026.

Traders were already discounting tariff authority before the Iran announcement surfaced. Lacking clear enforcement measures or legal clarity, the market interpreted the headline as conditional guidance rather than an immediate policy change.

This reflects the credibility discount in action: a tariff threat may appear expansive in principle but trades like an option until official documentation and enforcement timelines are established.

Why October broke and January bent

October 10 was more than just a headline; it represented a high-credibility macro shock impacting a structurally weak market. Trump’s 100% tariff announcement aimed at China came with a well-defined geographical scope, explicit framing of a trade war, and immediate cross-asset repricing.

The escalation of US-China tensions is a globally acknowledged risk trigger. In contrast, trade restrictions linked to Iran operate within a less defined policy environment where existing sanctions already limit transactions.

More crucially, the context beneath the headline was different. In early October, the open interest in perpetual futures had surged to near-record levels, funding rates were consistently positive, and leveraged positions were tightly clustered.

When the tariff news broke, it did not merely reprice risk; it compelled liquidations. Bitcoin plummeted to as low as $104,782 before finding stability after over $19 billion in liquidations occurred. This wave of liquidations was not a reflection of new information regarding crypto’s fundamentals but rather a mechanical unwinding driven by forced sales and diminishing liquidity.

Conversely, the setup on January 12 appeared different. Data from CoinGlass reveals that the current open interest is approximately $62 billion. While this figure is elevated, it remains well below the $90 billion observed prior to the October 10 sell-off.

Bitcoin’s perpetual futures open interest peaked at nearly $90 billion in early October 2025 before falling to around $60 billion by January 2026.

Additionally, funding rates remained within a modest range of 0.0003–0.0008% per eight-hour period, significantly below the crowded-long thresholds that can exacerbate downturns.

Deribit recently observed an increase in seven-day at-the-money implied volatility of about 10 vol points, indicative of traders purchasing hedges and repricing tail risk. Yet, spot prices held steady.

Bitcoin ETFs recorded net inflows of roughly $150 million in January, according to data from Farside Investors. This suggests that institutional activity is countering any selling pressure driven by headlines, albeit by a narrow margin.

Bitcoin spot ETFs experienced net outflows of $243.2 million on January 6 and $486.1 million on January 7, 2026, reflecting consecutive days of investor withdrawals despite positive inflows.

The outcome was a dip-and-recover pattern rather than a liquidation surge. Markets that can hedge quickly and maintain greater liquidity don’t transmit geopolitical noise into systemic disruptions.

October’s liquidation spiral required both a high-credibility shock and a market structure set to amplify it. January lacked both elements.

Iran’s trade footprint and the real transmission channel

If the tariff threat had an immediate and enforceable scope, it would be significant—not because of Iran itself, but due to China.

China is Iran’s largest trading partner by a considerable margin. As reported by Reuters, China imported $22 billion worth of Iranian goods in 2022, with more than half being oil.

In 2025, China accounted for over 80% of Iran’s crude exports, averaging around 1.38 million barrels per day, which constituted approximately 13.4% of China’s seaborne imports.

This implies that any serious effort to penalize “countries conducting business with Iran” would essentially transform into a China-related issue, with Brazil also affected through agricultural exports to Iran.

The complexity of enforcement contributes to why markets reacted skeptically to the announcement. There is no straightforward targeting mechanism and no clear means to isolate transactions linked to Iran without disrupting larger trade flows, nor is there any precedent for how such a regime would function in reality.

The transmission channel that holds significance is oil. Brent crude was trading at around $64 per barrel, while West Texas Intermediate was near $59.70, with analysts estimating a $3 to $4 per barrel geopolitical risk premium associated with tensions over Iran.

If this premium persists and exerts sustained upward pressure on inflation expectations, the real impact on crypto would arise through the rates channel: rising oil prices, increasing inflation expectations, elevated real yields, and weaker risk assets.

The vulnerability of crypto to geopolitical factors is not direct but indirect, mediated through macro repricing.
Framework for pricing policy noise

The pattern that emerges from comparing January 12 and October 10 is clear: policy headlines influence markets when they combine credibility, immediacy, and fragile positioning.

Breaking down the reaction function into its components:

Dimension	Key question	Evidence checklist (what to verify)	Market/quant proxies (what to measure)	Scoring guide (0–5)	If the score is high, expect…
Credibility	Is this real policy or merely rhetoric?	Is there a signed executive order? Has a Federal Register notice been published? Has agency guidance (e.g., CBP) been issued? Is there a clear statutory authority cited (and legally sustainable)?	“Docs present” (yes/no); time from headline → formal action; legal clarity (court status / prediction-market odds)	0: social media post only, no documentation/authority. 3: partial documents or credible leaks, authority in dispute. 5: signed + published + agency implementation + clear authority	Repricing that sticks (not just a brief movement); volatility bid remains
Immediacy	Can this hit flows/cashflows soon?	Is an enforcement date specified? Are there identifiable counterparties? Are the covered transactions clearly defined?	Days-to-enforcement; scope breadth; compliance feasibility; cross-asset reaction speed	0: no date/scope. 3: date or scope exists, but remains vague. 5: date + scope + counterparties + enforcement mechanism	Faster, cleaner risk movement; less dip-buying
Leverage fragility	Will market structure convert a headline into forced selling?	Is the market heavy with open interest? Are funding rates persistently positive? Are liquidation levels clustered near the spot price? Is the implied volatility regime complacent or already stressed?	OI / market cap; funding (8h) level & persistence; liquidation heatmaps/clusters; IV level + term structure (7D vs 30D)	0: low OI ratio, negative/flat funding, dispersed liquidations, IV already high. 3: elevated but not extreme. 5: extreme OI ratio + hot funding + tight liquidation clusters + low-vol complacency	Higher likelihood of a cascade; large liquidation prints; liquidity gaps

October 10 scored high on credibility, with a clear focus on China and trade-war escalation rhetoric. It also received a high score for immediacy due to a direct tariff threat with broad market interpretation, and extreme leverage fragility driven by record levels of open interest, crowded positions, and low hedging.

In contrast, January 12 scored low on credibility due to the absence of formal documentation. It also ranked low on immediacy because of unclear enforcement scope and timing, and moderately on leverage: elevated yet not extreme, with evident active hedging in volatility markets.

The market’s subdued reaction to January 12 was not a result of irrational sentiment or desensitization. It was a rational repricing through the lenses of enforceability and positioning.

What could flip the script

The prevailing outlook is that the Iran tariff threat remains a headline without substance. It represents an option that traders monitor but do not feel compelled to price aggressively until implementation mechanics are clarified.

However, several scenarios could alter that perspective.

If a formal executive order is issued with a clear enforcement scope, specifying particular sectors or counterparties and establishing definitive start dates, both credibility and immediacy would increase.

Markets would then need to reprice the tail risk associated with broad Iran-linked tariffs potentially coming into effect, which would complicate oil flows and diplomatic relations with China.

Should the Supreme Court validate Trump’s emergency-tariff authority under IEEPA, future tariff announcements could regain credibility even without comprehensive documentation. Conversely, if the Court disallows the regime, tariff threats would lose their structural impact, although short-term volatility surrounding refund obligations could create turbulence across assets.

If the geopolitical risk premium on oil persists and inflation expectations rise sufficiently to elevate real yields, crypto could experience downward pressure through the rates channel, regardless of whether Iran’s tariffs materialize.

The dynamics of leverage and liquidity that caused October’s market disruption can quickly re-establish if positioning becomes crowded again and funding rates rise back into elevated ranges.

What crypto learned

The takeaway from January 12 is not that crypto has become immune to geopolitical risks. Rather, it is that crypto has become immune to unenforced geopolitics, at least until leverage returns.

Markets that assess policy through credibility filters, hedge proactively, and maintain depth can absorb headline volatility without cascading effects. Those that do not, cannot.

Trump’s Iran tariff threat landed in a structure that had adapted. Traders opted to buy volatility instead of selling spot. Open interest remained elevated but not extreme. Institutional flows mitigated retail concerns. The result was a dip that recovered within hours rather than a liquidation wave compounding over days.

The fragility has not vanished; it is conditional. If credibility increases, if immediacy sharpens, if leverage rebounds to October’s extremes, the next tariff announcement or macro shock could trigger a similar cascade.

Until that time, crypto will continue to regard maximalist announcements as negotiating tactics rather than executable policies. The Supreme Court will determine whether this discount is justified.

The post Bitcoin ignored Trump’s latest 25% tariff threat, but the $19B liquidation ghost from October is quietly resetting in the shadows appeared first on CryptoSlate.