US Treasury Secretary Scott Bessent announced on Thursday that the US would lift restrictions aimed at limiting Chinese companies’ access to technology deemed sensitive by the government.
The lifted restrictions were part of a deal where China agreed to pause its export controls on rare earth minerals used in electronics and defense, according to Reuters.
Bessent’s statement follows a period of easing trade tensions between the two nations, typically a positive signal for cryptocurrency values.
Nonetheless, recent comments from Federal Reserve Chair Jerome Powell following the Federal Open Market Committee (FOMC) meeting, which indicated that FOMC members have “strongly differing views” on a potential interest rate cut in December, caused a market downturn on Thursday.
The Federal Reserve also indicated the conclusion of quantitative tightening, which limits liquidity within the financial system. Increased liquidity is generally favorable for cryptocurrency prices.
Despite this, there is often a gap between the cessation of QT and the onset of quantitative easing, wherein liquidity is pumped into the financial system, suggesting that cryptocurrency values may decline further until liquidity measures commence.
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Crypto liquidations exceed $1 billion following FOMC meeting
Bitcoin’s (BTC) price dropped by 35% in 2019 after the Federal Reserve concluded QT, heightening investor concerns about a similar outcome in the current market cycle.
Powell’s remarks at Wednesday’s FOMC press conference heightened uncertainty regarding the trajectory of monetary policy, despite the Fed reducing interest rates by 25 basis points.
“Inflation has significantly eased from its highs in mid-2022 but remains somewhat elevated compared to our 2% target,” Powell stated.
He also mentioned that the FOMC is facing challenges in balancing the Fed’s dual mandate of maximum employment and price stability.
“There were strongly differing opinions on how to proceed in December. A further cut in the policy rate at the December meeting is not guaranteed — far from it. Policy is not predetermined,” he added.
Over $1.1 billion was liquidated from the crypto market within the next 24 hours, resulting in Bitcoin’s price declining below $107,000 and crossing its 200-day exponential moving average (EMA), a vital dynamic support level, according to data from Nansen.
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