US Treasury Secretary Scott Bessent said on Thursday that the United States would suspend restrictions aimed at limiting Chinese companies’ access to purchase technology that the US government considers sensitive.
The easing of restrictions was granted in exchange for China agreeing to suspend its export controls on rare earth minerals used in electronics and military defense applications, according to Reuters.
Bessent’s announcement follows several weeks of easing trade tensions between the two countries, which normally serves as a positive catalyst for cryptocurrency prices.
However, the recent meeting of the Federal Open Market Committee (FOMC) and comments from Federal Reserve Chairman Jerome Powell, including that FOMC members have “very divergent views” on an interest rate cut in December, sent markets stumbling on Thursday.
The Federal Reserve has also signaled an end to quantitative tightening, which restricts liquidity in the financial system, and higher liquidity is also a positive catalyst for cryptocurrency prices.
Despite this, there is typically a gap between the end of QT and the start of quantitative easing, when liquidity is actively pumped through the financial system, meaning that cryptocurrency prices can continue to fall until liquidity injections arrive.
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Crypto Liquidations Surpass $1 Billion After FOMC Conference
The price of Bitcoin (BTC) fell 35% in 2019 after the Federal Reserve ended QT, causing investors to fear a similar scenario during the current market cycle.
Powell’s comments at Wednesday’s FOMC news conference also left investors uncertain about the direction of monetary policy, despite the Fed cutting interest rates by 25 basis points.
“Inflation has declined significantly from its peaks in mid-2022, but remains somewhat elevated relative to our 2% target,” Powell said.
He also added that the FOMC was struggling to balance the Fed’s dual mandate of maximum employment and stable prices.
“There were very divergent views on how to proceed in December. A further reduction in the policy rate at the December meeting is not inevitable, far from it. Policy is not on a predefined trajectory,” he added.
More than $1.1 billion was liquidated from the crypto market in the next 24 hours, sending the BTC price below $107,000 and its 200-day exponential moving average (EMA), a critical and dynamic support level, according to Nansen data.
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