Several traders on Polymarket are facing substantial losses after President Trump rolled back tariffs on the European Union and made fresh remarks on Greenland.
While the so-called “TACO trade” has proven costly for many participants, it has also fueled a renewed rally in crypto markets.
Trump’s Tariff Threats and Retreats Revive the “TACO Trade” Narrative
For context, the phrase “TACO trade” stands for “Trump Always Chickens Out.” Financial Times columnist Robert Armstrong introduced it in May 2025.
This strategy plays on a repeat cycle: Trump uses extreme threats as leverage, markets react negatively, and then he backs down, prompting rebounds.
This cycle stood out on April 2, 2025, called “Liberation Day.” The President announced sweeping tariffs that targeted nearly every US trading partner, triggering market chaos.
The policy was later scaled back. However, new tariffs targeting specific industries followed shortly thereafter.
A comparable pattern has emerged in January 2026. Over a weekend announcement, President Trump outlined plans to impose a 10% tariff on eight European nations, with implementation scheduled for February 1.
The proposal included a provision to raise those duties to 25% by June, with the duration linked to the US reaching an agreement on the purchase of Greenland.
On Wednesday, the President reversed course and called off the proposed tariffs. He also ruled out the use of military force to pursue control of Greenland.
“Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region. This solution, if consummated, will be a great one for the United States of America, and all NATO Nations. Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st,” Trump wrote.
Trump Tariff Reversal Triggers Losses on Greenland Bet in Prediction Markets
The abrupt shift prompted sharp repricing across political and macro-related contracts on prediction markets. On Polymarket, the odds for the question “Will Trump acquire Greenland before 2027?” fell to just 11%.
Odds of Trump Acquiring Greenland By December 2027. Source: Polymarket
As a result, traders who placed sizeable wagers on a “Yes” outcome suffered significant losses. Lookonchain reported that a newly created account, GamblingRuinsLives, placed $105,000 on “Yes.”
Now, the trader is down $46,000, with their position valued at just $56,300. Another trader, opticnrvs, lost even more, over $91,000, also betting on the Greenland acquisition.
Top holders of the “Yes” position are now experiencing drawdowns of approximately 40% to 50%. By contrast, traders betting on a “No” outcome have recorded modest profits.
The episode highlights how quickly political narratives can unwind in prediction markets, particularly when policy threats are reversed or softened. It also reinforces the growing influence of short-term political signaling on speculative positioning.
Meanwhile, the “TACO trade” has continued to support crypto markets. According to BeInCrypto Markets data, total crypto market capitalization increased by 1.5% over the past 24 hours as investor sentiment improved alongside broader risk appetite. All top 10 crypto assets were in green, recording modest but broad-based gains.
