US Treasury Secretary Scott Bessent stated on Thursday that the US will lift restrictions aimed at limiting Chinese companies’ access to technology deemed sensitive by the government.
The relaxed restrictions were part of an agreement in which China will suspend its export controls on rare earth minerals utilized in electronics and military defense, as reported by Reuters.
Bessent’s announcement comes after several weeks of easing trade tensions between the two nations, typically viewed as a positive indicator for crypto market prices.
Nonetheless, a recent Federal Open Market Committee (FOMC) meeting and remarks from Federal Reserve Chair Jerome Powell, which included that FOMC members have “strongly differing views” about a potential interest rate cut in December, led to market volatility on Thursday.
The Federal Reserve has also indicated the conclusion of quantitative tightening, which limits liquidity in the financial system; increased liquidity is often a favorable factor for crypto prices.
Despite this, there is usually a delay between the end of QT and the start of quantitative easing, a phase where liquidity is injected into the financial system, meaning crypto prices may decline further until that liquidity is introduced.
Related: US Treasury chief Bessent states a ‘substantial’ trade framework has been established with China
Crypto liquidations exceed $1 billion following FOMC conference
Bitcoin’s (BTC) price dropped by 35% in 2019 after the Federal Reserve concluded QT, raising concerns among investors about a repeat occurrence in the current market cycle.
Powell’s statements during Wednesday’s FOMC press conference left investors uncertain regarding the monetary policy trajectory, despite the Fed’s interest rate cut of 25 basis points.
“Inflation has significantly decreased from its peaks in mid-2022 but remains somewhat elevated compared to our 2% target,” Powell noted.
He also pointed out the challenges the FOMC faces in balancing the Fed’s dual objectives of maximizing employment and ensuring price stability.
“There were strong differences of opinion on how to proceed in December. A further reduction in the policy rate at the December meeting is not a certainty — far from it. The policy is not on a predetermined path,” he stated.
More than $1.1 billion was liquidated from the crypto market in the subsequent 24 hours, leading to Bitcoin’s price dropping below $107,000 and its 200-day exponential moving average (EMA), a critical support level, as indicated by data from Nansen.
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