US Treasury Secretary Scott Bessent announced on Thursday that the US will suspend restrictions limiting Chinese companies’ access to sensitive technology, in exchange for China pausing export controls on rare earth minerals essential to electronics and defense, according to Reuters. This development follows weeks of easing trade tensions, which typically buoy crypto markets.
Despite this positive trade news and recent interest rate cuts by the Federal Reserve, crypto prices remain under pressure due to ongoing macroeconomic and geopolitical uncertainties. Federal Reserve Chair Jerome Powell’s recent comments revealed “strongly differing views” among FOMC members regarding a potential December rate cut, contributing to market volatility.
Additionally, while the Fed signaled an end to quantitative tightening—a move that should improve liquidity—the delay before quantitative easing begins has left crypto markets vulnerable. Historical precedent shows that after the Fed ended QT in 2019, Bitcoin dropped 35%, fueling fears of a repeat downturn this cycle.
Powell indicated that inflation, though eased from mid-2022 highs, remains above the 2% target, complicating the Fed’s dual mandate of promoting maximum employment and stable prices. This uncertainty was reflected in over $1.1 billion in crypto liquidations within 24 hours, pushing Bitcoin below its critical 200-day exponential moving average.
The conflict between positive trade developments and cautious monetary policy has placed the crypto market at a crossroads, highlighting the fragile balance of global economic forces shaping its future.
Read more: https://cointelegraph.com/news/crypto-markets-rate-cuts-us-china-negotiations