US Treasury Secretary Scott Bessent announced on Thursday that the US will lift restrictions aimed at limiting Chinese companies’ access to technology deemed sensitive by the US government.
The relaxed restrictions were part of an agreement that saw China suspend its export controls on rare earth minerals essential for electronics and military defense applications, as reported by Reuters.
Bessent’s announcement comes after weeks of easing trade tensions between the two nations, typically seen as a positive factor for cryptocurrency prices.
However, the recent Federal Open Market Committee (FOMC) meeting and comments by Federal Reserve Chair Jerome Powell, indicating that FOMC members have “strongly differing views” regarding a potential interest rate cut in December, led to market turmoil on Thursday.
The Federal Reserve also indicated the cessation of quantitative tightening, which limits liquidity in the financial system, with increased liquidity often benefiting cryptocurrency prices.
Nevertheless, there’s usually a lag between the end of quantitative tightening and the onset of quantitative easing, during which the liquidity in the financial system decreases, potentially causing cryptocurrency prices to decline until further liquidity measures are implemented.
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Crypto liquidations surpass $1 billion following FOMC conference
Bitcoin (BTC) experienced a 35% decline in 2019 after the Federal Reserve concluded quantitative tightening, raising investor concerns about a similar scenario in the current market cycle.
Powell’s remarks during Wednesday’s FOMC press conference also left investors uncertain about future monetary policy directions, even after the Fed reduced interest rates by 25 basis points.
“Inflation has significantly decreased from its peaks in mid-2022, yet it remains above our 2% target goal,” Powell stated.
He also noted that the FOMC is struggling to balance the Fed’s dual mandate of achieving maximum employment alongside maintaining stable prices.
“There were strongly differing views on the approach for December. A further reduction in the policy rate during the December meeting is not guaranteed — far from it. Policy is not on a predetermined path,” he continued.
More than $1.1 billion was liquidated from the crypto market within the next 24 hours, driving Bitcoin’s price below $107,000 and below its 200-day exponential moving average (EMA), which serves as a critical support level, according to data from Nansen.
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