Bitcoin and the broader crypto market stayed as still as a pond on Tuesday, even while U.S. and China held some juicy diplomatic talks in Stockholm. Let’s face it, the market had no intention of moving, too busy watching these trade talks unfold.
Li Chenggang, Beijing's trade official, came out with some bold talk, saying the two sides agreed to extend a tariff pause past the August 12 deadline. But wait, before you get too excited, U.S. Treasury Secretary Scott Bessent popped the bubble, clarifying that the pause was discussed but not set in stone. Talk about a tease.
For now, the 90-day tariff pause is holding firm, with a hefty 30% tariff on Chinese goods entering the U.S. and a 10% tariff on U.S. goods going to China. If you were hoping for an official trade breakthrough, sorry to burst your bubble, but we’re still in limbo. Oh, and while that trade chat was happening, Trump hinted at possibly meeting with President Xi in China, but only if Xi invites him. Classic.
Despite these warm and fuzzy trade talks, the outlook for U.S.-China relations is still as fluid as ever. And what does this mean for crypto? Well, the market is likely gearing up for some drama with an eye on the next big moves.
The Fed’s Interest Rate Decision and Its Impact on Crypto
According to Daniel Liu, CEO of Republic Technologies, “It’s a pivotal week on the macroeconomic front.” If we get a string of favorable macro news, don’t be shocked if crypto makes a sharp move, he added. Can we get some action already?
Bitcoin’s price, after all this drama, took a tiny step back. As of late Tuesday, it was trading around $118,000, dipping slightly from the day’s peak of $119,258, based on the HodlFM price page. Not exactly the kind of bounce we were hoping for, huh?
And it’s not just Bitcoin; the broader crypto market’s been riding the waves of the tariff rollercoaster, with crypto acting as a high-beta version of U.S. equities. One day it’s up, the next it’s down, thanks to Trump’s tariff game of ‘proposal, then backtrack.’
Economists warn that the White House’s sweeping tariffs could just add more fuel to the Federal Reserve’s ongoing fight with inflation, which has been way too high lately, both in the U.S. and globally. Let’s not forget that inflation's been wreaking havoc everywhere.
Now, all eyes are on the Fed’s interest rate decision, expected Wednesday at 2 PM ET. While the market's not holding its breath for a rate cut in July (only a 3.1% chance, according to the CME’s FedWatch tool), September’s odds show a whopping 65.4% chance of a rate cut. Fingers crossed!
If the Fed does cut rates, risk assets like crypto could get a nice little bump. Lower rates make borrowing cheaper, which often drives investment into higher-return assets like crypto instead of the boring, low-yield bonds.
Traders are going to be glued to Federal Reserve Chair Jerome Powell's every word during the upcoming FOMC meeting. If Powell hints at “economic weakness,” expect rate cut odds to skyrocket, and crypto might just take off from there. Can’t wait to see where this goes!
Alex Shepel
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