On Thursday, US Treasury Secretary Scott Bessent announced the suspension of restrictions aimed at limiting Chinese companies’ access to technology deemed sensitive by the US government.
This easing of restrictions was made possible by China’s agreement to pause its export controls on rare earth minerals utilized in electronics and military defense, as reported by Reuters.
Bessent’s statement came after weeks of reducing trade tensions between the two nations, often seen as a favorable sign for crypto prices.
However, the recent Federal Open Market Committee (FOMC) meeting and Federal Reserve Chair Jerome Powell’s remarks, in which he noted “strongly differing views” among FOMC members regarding a potential interest rate cut in December, resulted in market volatility on Thursday.
The Federal Reserve has also indicated an end to quantitative tightening, a move that typically increases liquidity in the financial system, generally beneficial for crypto prices.
Nonetheless, there is usually a lag between the conclusion of QT and the initiation of quantitative easing, during which liquidity is injected into the system, implying that crypto prices might continue to drop until those liquidity measures are enacted.
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Crypto liquidations surpass $1 billion post-FOMC meeting
After the Federal Reserve ended QT in 2019, Bitcoin (BTC) saw a 35% drop, stirring fears of a similar situation in the current market landscape.
Powell’s statements during Wednesday’s FOMC press conference left investors confused about future monetary policy, despite the Fed’s recent 25 basis point interest rate cut.
“Inflation has decreased significantly from its peak in mid-2022 but still remains elevated compared to our 2% target,” Powell stated.
He also mentioned that the FOMC is struggling to balance the Federal Reserve’s dual objectives of maximum employment and price stability.
“There were significant differences of opinion on how to proceed in December. A further cut in the policy rate at the upcoming December meeting is not guaranteed — it is far from a certainty. The policy is not fixed in advance,” he remarked.
In the subsequent 24 hours, over $1.1 billion was liquidated from the cryptocurrency market, resulting in Bitcoin’s price dropping below $107,000 and its 200-day exponential moving average (EMA), a critical support level, according to data from Nansen.
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