On Thursday, US Treasury Secretary Scott Bessent announced that the US would lift restrictions intended to hinder access for Chinese companies seeking to acquire technology deemed sensitive by the US government.
These lifted restrictions were offered in return for China’s decision to halt its export controls on rare earth minerals utilized in electronics and military defense applications, as reported by Reuters.
Bessent’s statement comes after several weeks of reducing trade tensions between the two nations, a typically encouraging sign for crypto market prices.
Nevertheless, the recent Federal Open Market Committee (FOMC) meeting and Federal Reserve Chair Jerome Powell’s remarks, particularly regarding the “strongly differing views” among FOMC members on a potential interest rate cut in December, led to market setbacks on Thursday.
The Federal Reserve also indicated the conclusion of quantitative tightening, a measure that restricts liquidity within the financial system; increased liquidity usually supports crypto prices.
However, there is often a gap between the cessation of QT and the initiation of quantitative easing, where liquidity is actively increased in the financial system, suggesting that crypto prices might decline further until liquidity boosts are enacted.
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Crypto liquidations exceed $1 billion after FOMC meeting
The value of Bitcoin (BTC) dropped by 35% in 2019 following the end of QT by the Federal Reserve, raising investor concerns about repeating this during the current market cycle.
Powell’s remarks at the FOMC press conference also left investors anxious about the future of monetary policy, even with the Fed reducing interest rates by 25 basis points.
“Inflation has significantly decreased from its peaks in mid-2022, but remains somewhat elevated compared to our 2% target,” noted Powell.
He also mentioned that the FOMC is facing difficulties in balancing the Fed’s dual objectives of maximum employment and stable prices.
“There were strongly differing opinions on how to move forward in December. A further reduction in the policy rate during the December meeting is not guaranteed — quite the opposite. Policy isn’t on a predetermined path,” he added.
More than $1.1 billion was liquidated from the crypto market within the subsequent 24 hours, resulting in Bitcoin’s price falling below $107,000 and below its 200-day exponential moving average (EMA), a vital and dynamic support level, as per information from Nansen.
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