Cryptocurrency markets can breathe a sigh of relief. After the worst liquidation day in cryptocurrency history, tensions in the US-China trade war are visibly easing. On Sunday, both sides sent signals that give hope for the de-escalation of the conflict and a potential rebound in prices.
Beijing ready for dialogue
China’s Ministry of Commerce issued a statement declaring its readiness to “strengthen dialogue” with other countries on trade issues. Interestingly, this also applies to the recently announced export controls on rare earth metals – the very ones that caused the latest wave of panic in the markets.
Beijing went a step further, signaling that it would “actively consider” introducing simplifications in its export policy, including license exemptions. This is a significant move that may indicate a desire to end the conflict. So why all this crap? Geopolitics, my lord, geopolitics.
Trump changes his rhetoric – from threats to help
On the same day, US President Donald Trump released a surprisingly mild statement:
Don’t worry about China, everything will be fine! Respected President Xi simply had bad timing. He doesn’t want a crisis for his country, and neither do I. The US wants to help China, not harm it!!!
This is a stark change of tone from Friday’s rhetoric, when Trump announced an additional 100% tariffs on goods from China in response to controls on rare earth exports. He then said there was “no reason” to meet with Xi Jinping at the APEC summit in Seoul scheduled for October 31.
A Friday we’d rather not remember
Trump’s Friday reaction to the Chinese announcement caused a real massacre on cryptocurrency markets. It was the worst 24-hour liquidation event in the entire history of cryptocurrencies. Billions of USD evaporated in a matter of hours, and investors watched their portfolios fall completely. My editorial colleague Ryszard wrote more about the flash crash.
Analysts are hoping for a rebound
Experts from The Kobeissi Letter do not hide their optimism:
If President Trump responds and de-escalates on Sunday, markets are poised for a big jump on Monday. Market reactivity to Trump’s posts remains incredibly high
And it’s hard to disagree with them – recent months have shown that one tweet can shake the entire global financial system. The only question is whether this time the algorithms and investors will believe the gentler message. Nevertheless, we know that Monday was moderately stable, but it is worth remembering that there is still a day ahead in the USA, which falls on our night 😉
Will the summit meeting take place?
Jeff Park, an adviser at the investment firm Bitwise, is convinced that the Trump-Xi meeting “will definitely take place.” Moreover, he claims that “it has nothing to do with tariffs.”
Park argues that Trump will attend the summit for image reasons – “historical memorabilia, photo sessions and lavish ceremonies that will secure his immortality.” Cynical? Does it smell like megalomania? Maybe. But in a world where one tweet can cause billions of dollars in losses, you have to take every scenario into account.
What’s next?
If de-escalation continues, we may witness a significant rebound in markets – both traditional and cryptocurrency. The month-long trade war between the US and China (triggered by US tariffs) has caused enough confusion. Time for stabilization.
Of course, for now we only have declarations – both from the US and China. In geopolitics, words are cheap, and reality verifies every promise. Nevertheless, if both sides really want to withdraw from escalation, the coming week may bring the desired rebound.
Will the markets believe in a softer tone or will they wait for specific actions?
