Bessent is walking back on trade restrictions, but the crypto markets are still surprising
US Treasury Secretary Scott Bessent said on Thursday that the US would suspend restrictions designed to limit access to Chinese companies that buy technology the US government considers sensitive.
The eased restrictions were given in exchange for China agreeing to suspend them Export controls on rare earth minerals Used in defense electronics and military applications, according to Reuters.
Bessent’s announcement follows several weeks of softening of trade tensions between the two countries, which is usually a positive catalyst for crypto prices.
However, the recent meeting of the Federal Open Market Committee (FOMC) and Federal Reserve chairman Jerome Powell’s Commentswith FOMC members having “strongly divergent views” about an interest rate cut in December, sending markets tumbling on Thursday.
The Federal Reserve has also signed off on the end of quantitative easing, which is restricting liquidity in the financial system, and higher liquidity is also a positive catalyst for crypto prices.
Despite this, there is usually a gap between the end of QT and the beginning of quantitative easing, when liquidity is actively pumped through the financial system, meaning that crypto prices can sink further to the downside until liquidity injections arrive.
Related: US Treasury chief Bessent said a ‘substantial’ trade framework with China had been reached
Crypto Liquidations crossed $1 billion following the FOMC conference
The price of bitcoin (BTC) fell 35% in 2019 after the Federal Reserve ended QT, Sparking Investor Fear of a similar scenario during the current market cycle.
Powell’s comments at Wednesday’s FOMC press conference also left investors uncertain about the direction of monetary policy, despite Fed slashing interest rates By 25 points basis.
“Inflation has retreated significantly from its mid-2022 highs, but remains relatively elevated relative to our 2% target objective,” Powell said.
He also added that the FOMC is having trouble balancing the Fed’s dual mandate of maximum employment and stable pricing.
“Views differ strongly about how to proceed in December. A further policy rate cut at the December meeting is not a foregone conclusion – far from it. Policy is not on a preset course,” he added.
More than $ 1.1 billion is liquid From the crypto market in the following 24 hours, causing the price of BTC to fall below $ 107,000 and the 200-day exponential moving average (EMA), a critical and dynamic level of support, according on data from Nansen.
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