Trump's military action to arrest Maduro, why did the crypto market respond with a correction?

On the afternoon of January 3rd Beijing time, a massive explosion was reported in Caracas, the capital of Venezuela, and air raid sirens sounded. U.S. President Trump subsequently confirmed that he had ordered a military strike against Venezuela, utilizing air, land, and sea forces, successfully capturing Venezuelan leader Maduro. This was a sudden major geopolitical event, and the crypto markets immediately responded—risk assets experienced a noticeable pullback.

Core of the Event: U.S. Military Intervention in Venezuela

Scale and Method of Action

Trump detailed this military operation at a press conference on January 4th. The U.S. military raided a heavily fortified military fortress in downtown Caracas and successfully took Maduro into custody. Trump described it as “one of the most shocking, effective, and powerful demonstrations of U.S. military strength and capability.”

According to the latest reports, the characteristics of this operation include:

• Deployment of three-dimensional combat forces across air, land, and sea
• All Venezuelan military forces have been fully suppressed
• Rapid execution, high efficiency, precise targeting

Subsequent Policy Intentions

Trump stated that the U.S. will continue managing Venezuela until a “safe, proper, and cautious transfer of power” is completed. This means it is not just a military operation but a direct intervention in Venezuela’s political situation.

Trump also mentioned that if necessary, the U.S. is prepared to launch a second strike. However, he indicated that he once believed a second wave was necessary, but now it may not be—implying that the first wave has achieved the desired effect.

Immediate Market Reaction

Risk Assets Experience a Pullback

According to relevant information, influenced by this event, the crypto market experienced a certain degree of decline. This is not coincidental but a standard market response to geopolitical risks.

The sensitivity of risk assets to geopolitical events is reflected in:

• Sudden events leading to decreased risk appetite among investors
• Capital shifting from high-risk assets to safe-haven assets
• Short-term liquidity tensions in the market
• Rising volatility index, market sentiment turning conservative

Why Crypto Markets Are Pulling Back

Cryptocurrencies, as risk assets, have similar risk tolerance to traditional markets. When sudden political or military events occur globally, markets typically:

1. First sell risk assets for cash
2. Shift to safe-haven assets like the US dollar
3. Wait for clearer signals of the event’s development before re-entering positions

Although the Venezuela incident does not directly involve the crypto industry, as a major global political event, it alters market risk preferences and thus impacts the short-term trend of crypto assets.

Geopolitical Implications and Long-term Impact

The Trump Administration’s More Aggressive Foreign Policy Shift

This military action marks a more direct and aggressive stance by the Trump administration in foreign policy. Compared to traditional diplomatic methods, this operation exemplifies “rapid decision-making and direct execution.”

According to reports, this was a military action directly ordered by Trump without congressional approval, which is quite rare in U.S. politics, reflecting Trump’s radical understanding of presidential powers.

Economic Intentions Behind Oil Industry Restructuring

Trump emphasized Venezuela’s oil industry during the briefing. He stated that Venezuela’s oil sector has severely decayed and is in a state of total collapse. He plans to bring in the largest U.S. oil companies to Venezuela to invest billions of dollars in repairing oil infrastructure.

The underlying economic logic is clear: gain political leverage through military control to secure economic benefits (oil industry). This is a traditional geopolitical competition tactic, but its expression in the 21st century is quite direct.

Insights for Crypto Investors

Geopolitical Risks Cannot Be Ignored

This event reminds crypto investors that changes in global geopolitics can directly impact the crypto market. Although cryptocurrencies claim to be “decentralized,” in actual trading, they are still influenced by macroeconomic and political environments.

Correlation of Risk Assets

Cryptocurrencies tend to have increased correlation with other risk assets (such as tech stocks, emerging market assets) during risk events. When panic occurs, these assets often decline simultaneously rather than behaving independently as expected.

Attention to Policy Uncertainty

The aggressive shift in foreign policy by the Trump administration may also influence its stance on cryptocurrency policies. While Trump is currently viewed as “crypto-friendly,” changes in the global political environment could alter this attitude.

Summary

Trump’s military operation against Venezuela is a significant geopolitical event, marking a more direct and aggressive foreign policy stance by the U.S. government. The immediate market response (risk asset pullback) indicates that crypto investors need to closely monitor global political risks.

Although this event does not directly involve the crypto industry, it reminds us that while crypto markets emphasize independence, in practice, they remain part of the global financial system and are deeply affected by macroeconomic and political environments. For long-term investors, understanding geopolitical risks and managing risk exposure should be fundamental investment disciplines. In the short term, markets may continue to be influenced by this event; in the medium term, further developments and market re-pricing should be observed.