U.S. Treasury Secretary Scott Bessent stated on Thursday that the U.S. will suspend measures aimed at restricting Chinese companies from acquiring technologies deemed sensitive by the U.S. government.
According to Reuters, the easing of restrictions is in exchange for China agreeing to suspend export controls on rare earth minerals used for electronic products and military defense applications.
Bessent's statement came weeks after a de-escalation in trade tensions between the two countries, which is often a positive catalyst for cryptocurrency prices.
However, the recent Federal Open Market Committee (FOMC) meeting and comments from Federal Reserve Chairman Jerome Powell, including strong disagreements among FOMC members regarding a rate cut in December, led to a market decline on Thursday.
The Federal Reserve also signaled an end to quantitative tightening, which has restricted liquidity in the financial system, while higher liquidity is also a positive catalyst for cryptocurrency prices.
Nevertheless, there is usually a time lag between the end of quantitative tightening and the start of quantitative easing, the latter actively injecting liquidity into the financial system, meaning that cryptocurrency prices may further decline before liquidity injections arrive.
Bitcoin (BTC) prices fell 35% after the Fed ended quantitative tightening in 2019, raising concerns among investors about a similar situation in the current market cycle.
Powell's comments during the FOMC press conference on Wednesday also left investors uncertain about the direction of monetary policy, despite the Fed cutting rates by 25 basis points.
"Inflation has significantly eased from its mid-2022 peak, but it remains slightly elevated relative to our 2% target," Powell said.
He also added that the FOMC is struggling to balance the Fed's dual mandate of maximum employment and price stability.
"There is strong disagreement on how to proceed in December. A further rate cut at the December meeting is not a foregone conclusion—far from it. Policy is not proceeding along a preset path," he added.
According to Nansen data, over $1.1 billion in cryptocurrency was liquidated in the following 24 hours, causing BTC prices to drop below $107,000 and its 200-day exponential moving average (EMA), which is a key dynamic support level.
Related: The Fed signals "end of quantitative tightening": What does this mean for Bitcoin (BTC) prices?
Original article: “Despite Fed rate cuts and easing U.S.-China trade tensions, crypto markets still face a severe setback”
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