US Treasury Secretary Scott Bessent announced on Thursday that the US will pause restrictions aimed at limiting the ability of Chinese companies to acquire sensitive technology.
This relaxation of restrictions was contingent upon China agreeing to halt its export controls on rare earth minerals crucial for electronics and military defense, as reported by Reuters.
Bessent’s declaration comes after weeks of easing trade tensions between the two nations, typically seen as a positive indicator for crypto market performance.
However, the recent Federal Open Market Committee (FOMC) meeting and comments from Federal Reserve Chair Jerome Powell, who noted that FOMC members hold “strongly differing views” on a potential interest rate cut in December, led to market declines on Thursday.
The Federal Reserve has also indicated the conclusion of quantitative tightening, which limits liquidity in the financial system; increased liquidity usually serves as a positive trigger for crypto prices.
Nevertheless, there tends to be a lag between the end of quantitative tightening and the onset of quantitative easing, during which liquidity is actively introduced into the financial system, possibly leading to further declines in crypto prices until those liquidity inputs arrive.
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Crypto liquidations surpass $1 billion following FOMC meeting
The price of Bitcoin (BTC) dropped by 35% in 2019 after the Federal Reserve concluded its quantitative tightening, raising concerns amongst investors about a repeat of this scenario in the current market climate.
Powell’s remarks at Wednesday’s FOMC press conference have also left investors in doubt regarding the Federal Reserve’s monetary policy direction, despite the Fed reducing interest rates by 25 basis points.
“Inflation has significantly decreased from its peak in mid-2022 but remains somewhat high compared to our 2% target,” Powell stated.
He also noted that the FOMC faces challenges in balancing the Fed’s dual objectives of maximum employment and price stability.
“There were strong differences of opinion regarding how to move forward in December. A further reduction in the policy rate at the December meeting is not a settled matter — far from it. Policy is not on an established path,” he added.
In the following 24 hours, over $1.1 billion was liquidated from the crypto market, pushing the price of BTC below $107,000 and its 200-day exponential moving average (EMA), a crucial and dynamic support level, according to Nansen data.
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