Key Takeaways:
- President Trump calls his meeting with President Xi a “12 out of 10.”
- He announced lower tariffs on Chinese imports (down to 47%) and said the issue over US access to rare earths has been settled.
- After a tumble on yesterday’s muted rate cut decision, does this mean the crypto market will rally?
President Trump just called his face-to-face with President Xi in Seoul “a 12 out of 10,” capping the kind of diplomatic theatre traders love (and the crypto market desperately needs).
In a whirlwind of positive headlines, the White House announced a reduction in tariffs on Chinese imports following President Trump’s high-profile meeting with President Xi in Seoul. Trump also claimed that major progress had been made on issues like rare earth minerals.
At the time of writing, Chinese officials had yet to make any public commitments regarding export policies. For now, the truce narrative is being driven by Washington, as markets weigh whether the meeting is a real relief after months of escalating trade tensions.
Tariff Truce: Real Relief, or Temporary Peace?
For the moment, hopes are tentatively flying. Trump says tariffs on Chinese goods will be lowered to 47%. Perhaps more importantly for the tech sector, China will delay its planned restrictions on rare earth minerals.
Trump also announced that tariffs on Chinese products used to make the opioid fentanyl will drop from 20% to 10%, with Beijing pledging sharper domestic controls on the drug’s export. Meanwhile, agricultural markets got their own sugar-coating, with China promising to immediately ramp up imports of US soybeans.
It’s music to the ears of risk assets in a week when they needed it most, after the crypto market fell on a moderately hawkish Fed and almost $500 million in BTC ETF outflows yesterday.
A Moody October for the Crypto Market
This week has been a bruiser for the crypto market and crypto prices. After last night’s Federal Reserve rate cut, the second this quarter, Fed Chair Jerome Powell took to the podium and promptly doused hopes for anything more in December.
His words? “A further reduction… is not a foregone conclusion, far from it.” That declaration sent stocks and crypto tumbling as the dollar firmed and traders marked down odds for further easy money.
Bitcoin tumbled 4% after Powell’s remarks, briefly losing grip of $109,000. Ethereum slipped below $4,000 as ETF outflows also weighed on the market; more than half a billion dollars exited the sector in a day, led by BTC withdrawals.
Many analysts see this as a standard turbulence sell-off. But no one waiting for fireworks from Powell was celebrating. Gold, meanwhile, retreated below $4,000 an ounce as well, mirroring investors’ broader retreat from riskier assets.
The Pivot: Is the Crypto Rally Just Getting Started?
Now, with the dust of the Powell letdown barely settled, attention swings back to geopolitics. Could the Trump-Xi tariff detente breathe new life into risk assets and crypto prices? It’s not a crazy question. The crypto market tends to surge on de-escalation in US-China spats, especially where global trade and supply chains intersect with the blockchain economy.
Still, the narrative has changed: monetary policy is no longer the sole driver. This new round of geopolitical honeymoon, no matter how fragile, is the story traders are watching. ETF outflows might keep a lid on immediate price surges, but the prospect of lower trade frictions and a pause in the economic saber-rattling from Washington and Beijing could support a broader risk rally, from stocks to crypto to commodities.
Road Ahead: Hope and Hurdles
Of course, there’s no guarantee this truce lasts. The details remain murky (and subject to the next tweet or headline). Rare earths, fentanyl, and farm goods have all been bargaining chips before. But for today, risk-takers finally have a solid headline tailwind: a major escalation is now off the table, if only for a while.
The crypto market, after a week of policy punches, might finally be off the mat. The charts say “maybe.” As always, the next move belongs to macro. Until then, the rally will be measured one diplomatic handshake (and one tweet) at a time.