US Treasury Secretary Scott Bessent announced on Thursday that the US will lift restrictions aimed at limiting the ability of Chinese companies to acquire technology deemed sensitive by the US government.
This move comes as China agrees to suspend its export controls on rare earth minerals essential for electronic and military defense applications, according to Reuters.
Bessent’s statement follows a period of easing trade tensions between the two nations, typically a positive catalyst for cryptocurrency prices.
Nonetheless, the recent Federal Open Market Committee (FOMC) meeting and Federal Reserve Chair Jerome Powell’s remarks, which highlighted that FOMC members hold “strongly differing views” regarding a potential interest rate cut in December, led to market instability on Thursday.
The Federal Reserve also indicated an end to quantitative tightening, which constrains liquidity in the financial system, and increased liquidity typically serves as a positive driver for crypto prices.
However, there is usually a delay between the cessation of QT and the initiation of quantitative easing, during which liquidity is actively injected into the financial system, indicating potential further declines in crypto prices until these liquidity measures take effect.
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Crypto liquidations surpass $1 billion after FOMC meeting
The price of Bitcoin (BTC) dropped by 35% in 2019 following the Federal Reserve’s conclusion of QT, triggering investor anxieties about a similar situation in the current market cycle.
Powell’s statements at Wednesday’s FOMC press conference also left investors questioning the trajectory of monetary policy, even as the Fed reduced interest rates by 25 basis points.
“Inflation has decreased notably from its peaks in mid-2022, but still remains somewhat high compared to our 2% target,” Powell stated.
He also mentioned that the FOMC is grappling with the challenge of balancing the Fed’s dual mandate of maximum employment and stable pricing.
“There were significant differences of opinion on how to move forward in December. A further reduction in the policy rate at that meeting is not guaranteed — far from it. Policy is not on a predetermined path,” he added.
More than $1.1 billion was liquidated across the crypto market in the subsequent 24 hours, leading to Bitcoin’s price dropping below $107,000 and sinking past its 200-day exponential moving average (EMA), a crucial level of support, according to data from Nansen.
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