The cryptocurrency markets showed signs of recovery following an unprecedented $19 billion liquidation event, supported by indications of a temporary ceasefire in the US-China trade conflict.
On Monday, Bitcoin (BTC) surged briefly above a two-week high of $116,400, fueled by investor optimism surrounding two major economic events this week: the upcoming Federal Open Market Committee (FOMC) interest rate decision on Wednesday and a potential trade agreement between the US and China expected as soon as Thursday.
Investor sentiment in the crypto space shifted from “fear” to “neutral” on Monday as reports surfaced that the US and China had tentatively agreed on a framework regarding import tariffs.
This rally occurred just days before US President Donald Trump and Chinese President Xi Jinping are scheduled to meet on Thursday to talk trade negotiations aimed at easing tensions between the world’s two largest economies.
“Optimism regarding US-China trade talks sparked a weekend surge in Bitcoin. The indications of progress have elevated overall risk sentiment,” stated Wenny Cai, co-founder and COO of crypto derivatives trading platform SynFutures, in a conversation with Cointelegraph.
Related: $19B crypto crash opens door to $200K Bitcoin in 2025: Finance Redefined
Trump expresses confidence in a trade deal
Further boosting investor enthusiasm, Trump expressed his belief that the two nations will “come away with the deal” following Thursday’s discussions, as reported by CNBC.
The signs of de-escalation enabled Bitcoin to surpass the critical short-term holder (STH) cost basis of approximately $114,000 for the first time since Trump’s renewed tariff threats triggered the $19 billion crypto market crash earlier in October.
Reaching this level is vital for Bitcoin’s recovery, as the STH group is more susceptible to short-term price changes. Prolonged momentum below this threshold often leads to considerable selling pressure from these holders.
Related: JPMorgan reportedly plans to let clients borrow against their Bitcoin and Ether
On October 10, Trump stated he would impose a 100% tariff on Chinese imports starting November 1, unless a trade agreement was finalized.
“[…] beginning November 1st, 2025 (or sooner depending on any further actions or changes from China), the United States will implement a 100% Tariff on China, in addition to any Tariffs they are currently subjected to,” Trump wrote in an October 10 post on Truth Social.
The cryptocurrency markets experienced a historic $19 billion liquidation event over the weekend after Trump’s declaration led to Bitcoin briefly dropping to $104,000 by October 17 the following week.
Wednesday’s interest rate decision is also driving increased interest in risk assets, including cryptocurrency. Current market predictions indicate a 96.7% likelihood of a 25-basis-point interest rate cut by the Federal Reserve, according to the CME Group’s FedWatch tool.
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