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US Treasury Secretary Scott Bessent mentioned on Thursday that the US would withdraw limitations aimed at restricting Chinese companies’ access to technology deemed sensitive by the US government.
The lifted limitations were offered in return for China consenting to halt its export regulations on rare earth elements utilized in electronics and military defense sectors, as reported by Reuters.
Bessent’s declaration comes after several weeks of easing trade conflicts between the two nations, which typically serves as a favorable trigger for cryptocurrency values.
Nonetheless, the recent Federal Open Market Committee (FOMC) assembly and Federal Reserve Chair Jerome Powell’s remarks, including that the FOMC members harbor “significantly differing opinions” regarding a December interest rate cut, led to market downturns on Thursday.
The Federal Reserve also indicated the cessation of quantitative tightening, which limits liquidity within the financial system, and increased liquidity generally serves as a positive impetus for cryptocurrency values.
Despite this, there is often a lag between the conclusion of QT and the initiation of quantitative easing, when liquidity is actively channeled into the financial system, implying that cryptocurrency prices may continue to decline until liquidity injections commence.
Crypto liquidations exceed $1 billion after FOMC gathering
The value of Bitcoin (BTC) plummeted by 35% in 2019 when the Federal Reserve concluded QT, arousing investor anxiety about a similar occurrence in the current market cycle.
Powell’s statements during Wednesday’s FOMC news briefing also left investors in doubt regarding the course of monetary policy, even after the Fed reduced interest rates by 25 basis points.
“Inflation has substantially decreased from its peaks in mid-2022, yet remains somewhat high compared to our 2% target,” Powell stated.
He also mentioned that the FOMC is encountering challenges in balancing the Fed’s dual responsibilities of maximum employment and price stability.
“There were significantly differing perspectives on how to move forward in December. A further drop in the policy rate at the December assembly is not a certainty — quite the opposite. Policy is not preordained,” he stated.
More than $1.1 billion was liquidated from the cryptocurrency market in the subsequent 24 hours, leading to a decline in BTC’s price below $107,000 and its 200-day exponential moving average (EMA), a vital and dynamic support level, as per data from Nansen.
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