US Treasury Secretary Scott Bessent said on Thursday that the US would suspend restrictions designed to limit access to Chinese companies buying technology that the US government considers sensitive.
The eased restrictions were given 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 softening trade tensions between the two countries, which is normally a positive catalyst for crypto prices.
However, the recent Federal Open Market Committee (FOMC) meeting and Federal Reserve Chair Jerome Powell’s comments, including that the FOMC members have “strongly differing views” about a December interest rate cut, caused markets to stumble on Thursday.
The Federal Reserve also signaled the end of quantitative tightening, which restricts liquidity in the financial system, and higher liquidity is also a positive catalyst for crypto prices.
Despite this, there is typically a gap between the end of QT and the beginning of quantitative easing, when liquidity is actively pumped through the financial system, meaning crypto prices can sink further to the downside until liquidity injections arrive.
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Crypto liquidations cross $1 billion following FOMC conference
The price of Bitcoin (BTC) fell by 35% in 2019 after the Federal Reserve ended QT, sparking 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, despite the Fed slashing interest rates by 25 basis points.
“Inflation has eased significantly from its highs in mid-2022, but remains somewhat elevated relative to our 2% target goal,” Powell said.
He also added that the FOMC is having trouble balancing the Fed’s dual mandate of maximum employment and stable pricing.
“There were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it. Policy is not on a preset course,” he added.
Over $1.1 billion was liquidated from the crypto 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 level of support, according to data from Nansen.
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