Traders are underestimating how severe and long-lasting the economic impact of the Middle East conflict could be, instead pricing in a “TACO” trade, short for “Trump always chickens out,” according to Coin Bureau founder Nic Puckrin.
The term "TACO" refers to U.S. President Donald Trump backing down in geopolitical conflicts.
One of the most recent TACO moves was the Greenland deal. In January 2026, Trump pushed to buy or even annex Greenland. He threatened tariffs on European allies and hinted at force.
Denmark and allies strongly resisted, raising geopolitical tensions. Later, Trump abruptly backed off, dropping tariff threats and ruling out force, instead settling for vague negotiations on access.
According to Puckrin, markets are hoping for another TACO, but the current scenario in the Middle East is quite different.
'It takes two to TACO'
This came at a time when the Middle East crisis had reached a new high. Trump rejected the idea of a ceasefire, hinting at his confidence that Israel would be able to end the war once the U.S. is done hitting Iran.
Meanwhile, Iran is also not showing any hints of backing away from continuously launching drones and missiles across neighbouring Gulf nations.
There have also been attacks on critical oil and gas facilities in the Gulf, further fueling the fears of a bigger supply crisis.
Puckrin is not the only one asking traders to be cautious on the TACO trade.
Last week, Jacob Manoukian, a top strategist at JPMorgan Private Bank, explained that while a deal between the U.S. and Iran is possible, it is not always easy to predict which way global events will turn. He cautioned traders that Wall Street was still trying to assess the situation.
The “TACO” narrative can influence crypto through changes in market expectations and liquidity cycles.
When traders anticipate aggressive policies such as tariffs or geopolitical escalation, markets initially turn risk-off, often pulling cryptocurrencies such as Bitcoin (BTC) lower alongside equities.
However, when those policies are softened or reversed, markets quickly shift back to risk-on, driving liquidity back into risk assets.