US Treasury Secretary Scott Bessent announced on Thursday that the US will halt restrictions aimed at limiting the access of Chinese firms to technology considered sensitive by the US government.
The lifted restrictions were a result of China agreeing to suspend its export controls on rare earth minerals crucial for electronics and military defense applications, according to Reuters.
Bessent’s announcement comes after weeks of easing trade tensions between the two nations, which typically serves as a positive driver for crypto prices.
Nonetheless, the recent Federal Open Market Committee (FOMC) meeting and Federal Reserve Chair Jerome Powell’s comments—notably that FOMC members hold “strongly differing views” on a potential December interest rate cut—led to market declines on Thursday.
The Federal Reserve also indicated the conclusion of quantitative tightening, which limits liquidity in the financial system, and increased liquidity generally serves as a positive influence for crypto prices.
However, there often exists a delay between the termination of QT and the initiation of quantitative easing, where liquidity is actively infused into the system, meaning crypto prices could decline further until liquidity injections occur.
Related: US Treasury chief Bessent mentions a ‘substantial’ trade framework reached with China
Crypto liquidations exceed $1 billion post-FOMC meeting
Bitcoin (BTC) experienced a 35% decline in 2019 after the Federal Reserve concluded QT, raising concerns among investors about a similar outcome in the current market conditions.
Powell’s remarks during Wednesday’s FOMC press conference also left investors unclear about the future of monetary policy, even as the Fed lowered interest rates by 25 basis points.
“Inflation has significantly reduced from its peaks in mid-2022 but remains somewhat elevated compared to our 2% target,” Powell stated.
He added that the FOMC is grappling with balancing the Fed’s dual mandate of maximum employment and stable pricing.
“There were strongly differing views on how to proceed in December. A further reduction in the policy rate at the December meeting is not assured—far from it. Policy is not on a preset trajectory,” he noted.
More than $1.1 billion was liquidated from the crypto market in the following 24 hours, resulting in Bitcoin’s price dropping beneath $107,000 and below its 200-day exponential moving average (EMA), a crucial support level, according to Nansen data.
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