Crypto Market on Alert as Trump Threatens New Military Action in Colombia

The crypto market is currently in a state of elevated caution following a threat of a military strike by U.S. President Trump in Colombia. This comes just after a military operation that was carried out in Venezuela.

Crypto Market Monitors Colombia amid Trump’s Threats

Tensions were further heightened on Sunday after Trump informed reporters on board Air Force One about the consideration of taking military action against the Colombian government. Directly asked if this is possible, Trump answered, ‘sounds good.’

He criticized the Colombian government for not doing enough to limit the smuggling of cocaine to the USA.

“Colombia is very sick, too, run by a sick man, who likes making cocaine and selling it to the United States, and he’s not going to be doing it very long,” Trump said.

The statements seemed to point to the Colombian President, Gustavo Petro, while also indicating the present government in Colombia will not stay in office for a very long time.

These were in response to recent events concerning the capture of Venezulan President Nicolas Maduro. Trump had made statements days ago, stating that Colombia and Mexico could soon be in line for interference due to drug smuggling into the United States.

Even with the threatening tone, digital assets did not react much despite the fear of a market crash among crypto investors.

Mexican President Claudia Sheinbaum has also denied the direct involvement of the U.S. in the efforts aimed at dealing with the cartels within the country. This has made Trump declare that “something is going to have to be done.” On a different note, the U.S. is closely following developments in Cuba, which has remained a loyal ally of Venezuela.

Why Geopolitical Events Matter to the Crypto?

In history, geopolitical tension hotspots have had a mixed effect on digital assets. Risk events normally cause a period of market volatility as a market reaction to speculative asset exposure. But current market trends seem to indicate a less sensitive reaction from the crypto market.

The recent strike in Venezuela caused concerns of a possible market selloff; however, the value of Bitcoin did not change much. Tools like the Crypto Fear & Greed Index are often employed to measure market reactions to possible external shocks. Currently, its readings show a balanced market attitude.

For instance, when Russia invaded Ukraine in early 2022, the global markets crashed, and the Bitcoin rate fell. But the recovery was rapid when people in the involved areas opted for crypto when banking services went haywire.

Such trends have also been observed in sanctioned economies. In cases where there is a lack of access to international finance, cryptoc services become a substitute.

Iran, for example, was known to conduct transactions using Bitcoin despite U.S. sanctions against it. The value of transactions involving the country was pegged at just about $1 billion in 2021 according to data.