U.S. Treasury Secretary Scott Bessent said Thursday that the United States would lift restrictions designed to limit access to Chinese companies that buy technology that the U.S. government deems sensitive.
The easing of restrictions came 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 is normally a positive catalyst for cryptocurrency prices.
However, the recent Federal Open Market Committee (FOMC) meeting and comments from Federal Reserve Chair Jerome Powell, including that FOMC members have “very different views” on an interest rate cut in December, caused markets to stumble on Thursday.
The Federal Reserve also signaled the end of quantitative tightening, which restricts liquidity in the financial system, and increased liquidity is also a positive catalyst for cryptocurrency 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 cryptocurrency prices may fall further until liquidity injections arrive.
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Crypto Liquidations Surpass $1 Billion Following FOMC Conference
The price of Bitcoin (BTC) fell 35% in 2019 after the Federal Reserve ended QT, raising investor fears 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, even though the Federal Reserve cut interest rates by 25 basis points.
“Inflation has slowed significantly from its mid-2022 highs, but remains somewhat elevated relative to our 2% target,” Powell said.
He also added that the FOMC is having trouble balancing the Fed’s dual mandate of maximum employment and stable prices.
“There were very different opinions on how to proceed in December. A further reduction in the official interest rate at the December meeting is not a foregone conclusion, far from it. Policy does not follow a pre-established course,” he added.
More than $1.1 billion was liquidated from the cryptocurrency market in the following 24 hours, causing the price of BTC to fall below $107,000 and its 200-day exponential moving average (EMA), a critical and dynamic support level, according to data from Nansen.
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