Cryptocurrency markets bounced back following a massive $19 billion liquidation event, supported by indications of a temporary truce in the US-China trade conflict.
On Monday, Bitcoin (BTC) climbed briefly past a two-week high of $116,400, fueled by investor anticipation of two major macroeconomic events this week: the upcoming Federal Open Market Committee’s (FOMC) interest rate announcement on Wednesday and a likely trade agreement between the US and China, expected as early as Thursday.
Investor sentiment in the crypto market shifted from “fear” to “neutral” on Monday after news broke that the US and China had established a “preliminary” framework for an import tariff arrangement.
This resurgence occurred just before US President Donald Trump and Chinese President Xi Jinping are scheduled to meet on Thursday to discuss trade negotiations aimed at averting further tensions between the world’s two largest economies.
“Recent positivity surrounding US-China trade discussions fueled a weekend surge in Bitcoin. Indications of progress have enhanced broader risk sentiment,” stated Wenny Cai, co-founder and COO at crypto derivatives trading platform SynFutures, in comments to Cointelegraph.
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Trump anticipates a “deal” between US and China
The easing of tensions enabled Bitcoin to rise above the pivotal short-term holder (STH) cost basis of approximately $114,000 for the first time since Trump’s renewed tariff threats triggered the $19 billion crypto market sell-off at the start of October.
Regaining this benchmark is vital for Bitcoin’s recovery, as the STH group is more reactive to short-term price changes. Staying below this threshold typically leads to significant selling pressure from these holders.
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On October 10, Trump announced a 100% tariff on Chinese imports set to take effect on November 1, unless a trading agreement is achieved.
“[…] from November 1st, 2025 (or sooner, depending on additional actions taken by China), the United States will impose a Tariff of 100% on China, above any Tariff they are currently paying,” Trump detailed in an October 10 Truth Social post.
The crypto markets experienced a record $19 billion liquidation over the weekend following Trump’s announcement, which caused Bitcoin to plunge to $104,000 by October 17, the following week.
Wednesday’s interest rate decision is also stoking demand for risk assets, including cryptocurrencies. Markets are currently factoring in a 96.7% chance of a 25-basis-point rate reduction by the Federal Reserve, according to the CME Group’s FedWatch tool.
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