Boosted by signs of a temporary ceasefire in the US-China trade war, the cryptocurrency market staged a recovery after a record $19 billion liquidation event.
Bitcoin (BTC) briefly reclaimed a two-week high above $116,400 on Monday, driven by investor expectations for two important macroeconomic catalysts this week: the upcoming Federal Open Market Committee (FOMC) interest rate decision on Wednesday and a potential trade agreement between the US and China that could be reached as early as Thursday.
After reports indicated that the US and China had reached a "preliminary" framework on import tariffs, cryptocurrency investor sentiment on Monday recovered from "fear" to a "neutral" range.
This rebound came just days before US President Trump and Chinese President Xi Jinping are scheduled to meet on Thursday to discuss trade negotiations, aimed at preventing further escalation between the world's two largest economies.
"Recent optimism surrounding US-China trade negotiations helped fuel Bitcoin's weekend rebound. Signs of progress have boosted broader risk sentiment," Wenny Cai, co-founder and COO of cryptocurrency derivatives trading platform SynFutures, told Cointelegraph.
Adding to investor appetite, Trump stated on Air Force One on Monday that he is optimistic that the two countries will "reach an agreement" after their meeting on Thursday, according to CNBC.
Signs of easing helped Bitcoin recover above the key short-term holder (STH) cost basis of around $114,000, marking the first time since Trump's renewed threat of tariffs led to a $19 billion cryptocurrency market crash in early October.
Reclaiming this level is crucial for Bitcoin's recovery, as the STH group is more sensitive to short-term price fluctuations. Sustained momentum below this level often invites significant selling pressure from these holders.
On October 10, Trump announced that he would impose a 100% tariff on Chinese imports, effective November 1, unless a trade agreement is reached.
"[…] Starting November 1, 2025 (or sooner, depending on any further actions or changes taken by China), the United States will impose a 100% tariff on China, on top of any tariffs they are currently paying," Trump wrote in a Truth Social post on October 10.
Following Trump's announcement, the cryptocurrency market experienced a record $19 billion liquidation event over the weekend, leading to a brief crash of Bitcoin to $104,000 on October 17 the following week.
Wednesday's interest rate decision is also driving more demand for risk assets, including cryptocurrencies. According to the CME Group's FedWatch tool, the market currently expects a 96.7% probability of a 25 basis point rate cut by the Federal Reserve.
Related: BTC price targets record monthly close: 5 things to know about Bitcoin this week
Original article: “Expectations of a US-China Tariff Truce Ease Market Panic, Bitcoin (BTC) Stands Firm”
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