The "TACO Trade" is a market speculation strategy centered around policy signals. Its acronym stands for "Trump Always Chickens Out," originating from former U.S. President Trump's behavioral pattern of initially applying strong pressure on issues like trade before eventually compromising and stepping back. This strategy has triggered significant volatility in both traditional financial markets and the crypto market.

Strategy Logic: The market experiences panic selling when policy signals are released (e.g., tariff impositions), followed by a rapid rebound when policies soften, forming a "pressure-repair" cycle.

Crypto Market Linkage: Due to high leverage and continuous trading mechanisms, cryptocurrencies react more sensitively to policy signals. For example, Trump's October 10th announcement of additional tariffs on China caused Bitcoin to plummet 8% in a single day, triggering $19 billion in liquidations. Prices quickly rebounded once policies eased.

Gray Areas and Manipulation Suspicions: On-chain analysis revealed that before the crash, whale accounts placed large short bets on Bitcoin. Fund flows were suspiciously linked to individuals associated with Trump family crypto projects, raising concerns about insider information leaks and market manipulation.

Double-Edged Impact: This strategy reflects market pricing based on policy signals, weakening the connection between assets and fundamentals. It may amplify volatility and trigger systemic risks, necessitating enhanced liquidity management and risk control from investors.

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Summary

I. The Concept of the "TACO Trade"

The term "TACO" was first coined by Financial Times columnist Robert Armstrong in May of this year, standing for "Trump Always Chickens Out." This concept stems from President Trump's typical policy style: he often starts with强硬 rhetoric or radical measures on issues like trade and tariffs to create negotiating leverage and build political pressure and media momentum. However, when market volatility intensifies or economic pressure mounts, he quickly softens his stance to avoid substantial impact on the economic fundamentals. This pattern of applying pressure first and then conceding has gradually formed a predictable policy cycle, becoming an important clue for understanding Trump's policy rhythm and its market impact.

Based on this logic, the "TACO Trade" is defined as a speculative strategy centered around policy changes, focusing on identifying short-term alignment between political signals and market prices. The "TACO Trade" typically exhibits a complete cycle: policy signal trigger, amplified market reaction, and emotional repair convergence. The process often begins with the release of strong policy signals on political issues, such as announcing tariffs, export controls, or sanctions, which quickly push up market risk premiums and trigger uncertainty. Subsequently, the market reprices within a short period, forcing leveraged and derivative positions to be liquidated, leading to sharp declines in asset prices. When the policy tone shifts toward pragmatism or signs of compromise emerge, market confidence gradually recovers, risk appetite returns, and capital flows back in, completing the cycle from emotional sell-off to rational recovery. Notably, the "TACO Trade" often has distinct timing and rhythm characteristics. Hardline signals are frequently released on weekends or overnight, exploiting liquidity gaps to create price gaps and emotional shocks, while缓和 statements usually appear on weekdays to guide expectations and repair market sentiment.

II. Crypto Market Linkage Triggered by the "TACO Trade"

As the logic of the "TACO Trade" repeatedly plays out in the market, its influence has extended beyond traditional assets, becoming particularly pronounced in the crypto market. A recent example: on October 10, President Trump posted a statement on Truth Social announcing plans to impose an additional 100% tariff on Chinese export goods and requiring the Department of Commerce to implement export controls on key Chinese software and rare earth-related products by November 1. This sudden statement was seen by the market as the biggest shift in U.S.-China trade policy since 2020, leading to a repricing of "global supply chain disruption risks." Consequently, U.S. stock futures fell rapidly, with the Dow Jones closing down 1.9% and the Nasdaq falling 3.6%. However, the White House's tone shifted significantly just two days later. On October 12, Trump emphasized in a speech that he "hopes to resolve differences through cooperation," and Vice President Vance also stated that the "tariff plan is still under assessment." On October 13, the Dow Jones rebounded 1.3%, and the Nasdaq recovered 1.6%, as market risk appetite quickly restored. This rhythm from强硬 pressure to softening repair once again confirmed the characteristics of the "TACO Trade": using political signals to create short-term panic, then releasing a trading rebound through corrections.

Compared to traditional assets, the cryptocurrency market demonstrated higher sensitivity and amplification effects during this "TACO Trade" cycle. Due to its high-leverage structure, continuous trading mechanism, and liquidity-driven nature, crypto assets became the first to react to policy uncertainty. On October 11, Bitcoin's price plunged from a high of $114,500 to $104,800, a single-day drop of over 8%; Ethereum briefly fell below $4,000. The "10·11 Crash" became one of the largest liquidation events in cryptocurrency history, with forced liquidations across the market reaching $19 billion. Major exchanges triggered automatic deleveraging mechanisms, and funding rates fell to their lowest levels since the end of the 2022 bear market. As policy tone eased and risk sentiment repaired on October 12, Bitcoin led the rebound above $115,000, and Ethereum recovered to $4,100. This indicates that the crypto market is becoming the most emotionally elastic market in the "TACO Trade" chain. Its price fluctuations not only synchronize with risk premium adjustments in traditional markets but also deepen the impact of policy signals on the market through emotional feedback.

III. The Gray Areas of the "TACO Trade"

Following the sharp volatility triggered by the "TACO Trade," the market began focusing on its underlying risks. Was this crash a natural reaction to policy expectations, or a liquidity trap meticulously designed by specific capital groups? On-chain analyst Eye's analysis pointed out significant anomalies in shorting behavior before the crash. Subsequently exposed on-chain transaction records and associated wallets further corroborated this analysis. Between October 8 and 9, a whale account named Garrett Jin sold approximately 35,000 Bitcoin cumulatively over two days on the Hyperliquid platform and simultaneously established $735 million in BTC perpetual short positions. From the evening of October 10 to the early hours of October 11, quantitative strategies on major platforms like Hyperliquid and Binance集中 triggered risk control thresholds, causing全网 liquidation amounts to soar to $9 billion within an hour, becoming the direct trigger for the "10·11 Crash." Further on-chain tracking showed that funds related to these large short positions were deliberately split before operations and transferred repeatedly through multiple layers of addresses. Hours later, some funds were remitted to multiple Binance deposit accounts. Among these transfer paths, one was confirmed to flow to the Ethereum domain name ereignis.eth, whose address activity timing highly overlapped with the aforementioned accounts, suggesting these funds likely originated from the same controlling party.

Recent developments further reveal the complexity of the gray areas in the "TACO Trade." Eye suggested that Garrett Jin might only be a proxy, and the leaker may not have provided information directly to him but through intermediaries, with this key information originating from insiders with access to the U.S. President's aides. Analysis indicates that the core operators are suspected to be Zach Witkoff and Chase Herro (both co-founders of the Trump family's crypto project, World Liberty Financial). They are believed to have exploited information in advance, organizing internal trading groups to establish highly advantageous positions before policy announcements, thereby amplifying market volatility. Eye even hinted that Trump's eldest son might be involved. On October 14, Eye stated that due to personal safety concerns, they would stop further disclosures. This alone illustrates that when policy expectations become tradable signals, the boundary between the crypto market and power information is quietly being breached.

IV. The Double-Edged Nature of the "TACO Trade"

The rise of the "TACO Trade"本质上 represents an adaptive pricing mechanism formed by the market in an environment where policies dominate and fundamentals take a back seat. Investors increasingly make judgments based on policy signals, with policies gradually replacing economic data as the primary variable affecting asset prices. Whether it's interest rate expectations, regulatory attitudes, or geopolitical statements, they are quickly translated into trading actions. Due to continuous trading hours, strong liquidity, and sensitive reactions, the crypto market has become a real-time radar for policy expectations. While this indeed enhances the market's reaction efficiency, it also brings structural issues. The connection between prices and real economic activity weakens, making trading more akin to betting on policy shifts rather than the fundamental value of protocols.

A deeper risk lies in the implicit premise of the "TACO Trade": that policies will ultimately return to stability. However, when the market universally bets on regression, trading behavior itself may inversely influence policymakers' judgments through price signals, thereby amplifying volatility and uncertainty. For the crypto market, with its high leverage levels and sensitive liquidation mechanisms, this feedback loop is particularly dangerous and could even evolve into systemic liquidity risk. In this sense, the "TACO Trade" is both a strategic framework and a mirror reflecting market behavior. In such an environment, investors may need to pay more attention to liquidity security and the resilience of risk exposure, while recognizing that true competitiveness lies not in the speed of predicting policy shifts, but in the ability to maintain stability and adaptability amid policy uncertainty.

The "TACO Trade" is a market speculation strategy centered around policy signals. Its acronym stands for "Trump Always Chickens Out," originating from former U.S. President Trump's behavioral pattern of initially applying strong pressure on issues like trade before eventually compromising and stepping back. This strategy has triggered significant volatility in both traditional financial markets and the crypto market.

Strategy Logic: The market experiences panic selling when policy signals are released (e.g., tariff impositions), followed by a rapid rebound when policies soften, forming a "pressure-repair" cycle.

Crypto Market Linkage: Due to high leverage and continuous trading mechanisms, cryptocurrencies react more sensitively to policy signals. For example, Trump's October 10th announcement of additional tariffs on China caused Bitcoin to plummet 8% in a single day, triggering $19 billion in liquidations. Prices quickly rebounded once policies eased.

Gray Areas and Manipulation Suspicions: On-chain analysis revealed that before the crash, whale accounts placed large short bets on Bitcoin. Fund flows were suspiciously linked to individuals associated with Trump family crypto projects, raising concerns about insider information leaks and market manipulation.

Double-Edged Impact: This strategy reflects market pricing based on policy signals, weakening the connection between assets and fundamentals. It may amplify volatility and trigger systemic risks, necessitating enhanced liquidity management and risk control from investors.

---

Summary

I. The Concept of the "TACO Trade"

The term "TACO" was first coined by Financial Times columnist Robert Armstrong in May of this year, standing for "Trump Always Chickens Out." This concept stems from President Trump's typical policy style: he often starts with强硬 rhetoric or radical measures on issues like trade and tariffs to create negotiating leverage and build political pressure and media momentum. However, when market volatility intensifies or economic pressure mounts, he quickly softens his stance to avoid substantial impact on the economic fundamentals. This pattern of applying pressure first and then conceding has gradually formed a predictable policy cycle, becoming an important clue for understanding Trump's policy rhythm and its market impact.

Based on this logic, the "TACO Trade" is defined as a speculative strategy centered around policy changes, focusing on identifying short-term alignment between political signals and market prices. The "TACO Trade" typically exhibits a complete cycle: policy signal trigger, amplified market reaction, and emotional repair convergence. The process often begins with the release of strong policy signals on political issues, such as announcing tariffs, export controls, or sanctions, which quickly push up market risk premiums and trigger uncertainty. Subsequently, the market reprices within a short period, forcing leveraged and derivative positions to be liquidated, leading to sharp declines in asset prices. When the policy tone shifts toward pragmatism or signs of compromise emerge, market confidence gradually recovers, risk appetite returns, and capital flows back in, completing the cycle from emotional sell-off to rational recovery. Notably, the "TACO Trade" often has distinct timing and rhythm characteristics. Hardline signals are frequently released on weekends or overnight, exploiting liquidity gaps to create price gaps and emotional shocks, while缓和 statements usually appear on weekdays to guide expectations and repair market sentiment.

II. Crypto Market Linkage Triggered by the "TACO Trade"

As the logic of the "TACO Trade" repeatedly plays out in the market, its influence has extended beyond traditional assets, becoming particularly pronounced in the crypto market. A recent example: on October 10, President Trump posted a statement on Truth Social announcing plans to impose an additional 100% tariff on Chinese export goods and requiring the Department of Commerce to implement export controls on key Chinese software and rare earth-related products by November 1. This sudden statement was seen by the market as the biggest shift in U.S.-China trade policy since 2020, leading to a repricing of "global supply chain disruption risks." Consequently, U.S. stock futures fell rapidly, with the Dow Jones closing down 1.9% and the Nasdaq falling 3.6%. However, the White House's tone shifted significantly just two days later. On October 12, Trump emphasized in a speech that he "hopes to resolve differences through cooperation," and Vice President Vance also stated that the "tariff plan is still under assessment." On October 13, the Dow Jones rebounded 1.3%, and the Nasdaq recovered 1.6%, as market risk appetite quickly restored. This rhythm from强硬 pressure to softening repair once again confirmed the characteristics of the "TACO Trade": using political signals to create short-term panic, then releasing a trading rebound through corrections.

Compared to traditional assets, the cryptocurrency market demonstrated higher sensitivity and amplification effects during this "TACO Trade" cycle. Due to its high-leverage structure, continuous trading mechanism, and liquidity-driven nature, crypto assets became the first to react to policy uncertainty. On October 11, Bitcoin's price plunged from a high of $114,500 to $104,800, a single-day drop of over 8%; Ethereum briefly fell below $4,000. The "10·11 Crash" became one of the largest liquidation events in cryptocurrency history, with forced liquidations across the market reaching $19 billion. Major exchanges triggered automatic deleveraging mechanisms, and funding rates fell to their lowest levels since the end of the 2022 bear market. As policy tone eased and risk sentiment repaired on October 12, Bitcoin led the rebound above $115,000, and Ethereum recovered to $4,100. This indicates that the crypto market is becoming the most emotionally elastic market in the "TACO Trade" chain. Its price fluctuations not only synchronize with risk premium adjustments in traditional markets but also deepen the impact of policy signals on the market through emotional feedback.

III. The Gray Areas of the "TACO Trade"

Following the sharp volatility triggered by the "TACO Trade," the market began focusing on its underlying risks. Was this crash a natural reaction to policy expectations, or a liquidity trap meticulously designed by specific capital groups? On-chain analyst Eye's analysis pointed out significant anomalies in shorting behavior before the crash. Subsequently exposed on-chain transaction records and associated wallets further corroborated this analysis. Between October 8 and 9, a whale account named Garrett Jin sold approximately 35,000 Bitcoin cumulatively over two days on the Hyperliquid platform and simultaneously established $735 million in BTC perpetual short positions. From the evening of October 10 to the early hours of October 11, quantitative strategies on major platforms like Hyperliquid and Binance集中 triggered risk control thresholds, causing全网 liquidation amounts to soar to $9 billion within an hour, becoming the direct trigger for the "10·11 Crash." Further on-chain tracking showed that funds related to these large short positions were deliberately split before operations and transferred repeatedly through multiple layers of addresses. Hours later, some funds were remitted to multiple Binance deposit accounts. Among these transfer paths, one was confirmed to flow to the Ethereum domain name ereignis.eth, whose address activity timing highly overlapped with the aforementioned accounts, suggesting these funds likely originated from the same controlling party.

Recent developments further reveal the complexity of the gray areas in the "TACO Trade." Eye suggested that Garrett Jin might only be a proxy, and the leaker may not have provided information directly to him but through intermediaries, with this key information originating from insiders with access to the U.S. President's aides. Analysis indicates that the core operators are suspected to be Zach Witkoff and Chase Herro (both co-founders of the Trump family's crypto project, World Liberty Financial). They are believed to have exploited information in advance, organizing internal trading groups to establish highly advantageous positions before policy announcements, thereby amplifying market volatility. Eye even hinted that Trump's eldest son might be involved. On October 14, Eye stated that due to personal safety concerns, they would stop further disclosures. This alone illustrates that when policy expectations become tradable signals, the boundary between the crypto market and power information is quietly being breached.

IV. The Double-Edged Nature of the "TACO Trade"

The rise of the "TACO Trade"本质上 represents an adaptive pricing mechanism formed by the market in an environment where policies dominate and fundamentals take a back seat. Investors increasingly make judgments based on policy signals, with policies gradually replacing economic data as the primary variable affecting asset prices. Whether it's interest rate expectations, regulatory attitudes, or geopolitical statements, they are quickly translated into trading actions. Due to continuous trading hours, strong liquidity, and sensitive reactions, the crypto market has become a real-time radar for policy expectations. While this indeed enhances the market's reaction efficiency, it also brings structural issues. The connection between prices and real economic activity weakens, making trading more akin to betting on policy shifts rather than the fundamental value of protocols.

A deeper risk lies in the implicit premise of the "TACO Trade": that policies will ultimately return to stability. However, when the market universally bets on regression, trading behavior itself may inversely influence policymakers' judgments through price signals, thereby amplifying volatility and uncertainty. For the crypto market, with its high leverage levels and sensitive liquidation mechanisms, this feedback loop is particularly dangerous and could even evolve into systemic liquidity risk. In this sense, the "TACO Trade" is both a strategic framework and a mirror reflecting market behavior. In such an environment, investors may need to pay more attention to liquidity security and the resilience of risk exposure, while recognizing that true competitiveness lies not in the speed of predicting policy shifts, but in the ability to maintain stability and adaptability amid policy uncertainty.