US Treasury Secretary Scott Bessent announced on Thursday the suspension of restrictions aimed at limiting access for Chinese companies to US technology deemed sensitive.
The lifted restrictions were part of an agreement where China would halt its export controls on rare earth minerals critical for electronics and military defense, as reported by Reuters.
Bessent’s remarks follow several weeks of diminishing trade tensions between the two nations, typically a positive sign for cryptocurrency prices.
Nevertheless, the recent Federal Open Market Committee (FOMC) meeting and Federal Reserve Chair Jerome Powell’s statements, noting the “strongly differing views” among FOMC members regarding a potential December interest rate cut, 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 tends to benefit crypto prices.
Despite this, there is generally a delay between the end of QT and the start of quantitative easing, during which liquidity is pumped into the financial system, suggesting crypto prices may continue to decline until liquidity becomes available.
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Crypto liquidations surpass $1 billion after FOMC meeting
The price of Bitcoin (BTC) plunged by 35% in 2019 following the end of QT, raising investor concerns about a similar outcome in the current market cycle.
Powell’s remarks during Wednesday’s FOMC press conference also left investors unclear about the future direction of monetary policy, despite the Fed reducing interest rates by 25 basis points.
“Inflation has significantly decreased from its peak in mid-2022, but remains relatively high compared to our 2% target,” Powell stated.
He further mentioned that the FOMC is struggling to balance the Fed’s dual mandate of maximum employment and stable pricing.
“There are dramatically differing opinions on the way forward in December. A further cut to the policy rate at the December meeting is not a certainty — far from it. Policy is not on a predetermined course,” he commented.
Over $1.1 billion was liquidated from the crypto market in the subsequent 24 hours, causing Bitcoin’s price to drop below $107,000 and its 200-day exponential moving average (EMA), an essential support level, according to data from Nansen.
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