Crypto News: Tom Lee Predicts Crypto Rally on US-China Trade Truce

Fundstrat’s Tom Lee predicts a crypto rally. Easing US-China tensions and lower inflation fuel this forecast.

Permabull Tom Lee predicts a significant crypto rally soon. He considers that easing trade tensions will help digital assets. This rally will involve Bitcoin and Ethereum in particular. Also, the U.S. equities should see gains. Therefore, there is a growing optimism in the market in all countries.

US-China Trade Truce Eases Market Uncertainty

Risk assets were in for a drubbing earlier this month. Namely, the White House abruptly disclosed 100% tariffs. This was aimed hard at the second largest economy in the world. Hence, the entire liquidated crypto erupted soon above $19 billion after a few hours. This was the biggest cryptocurrency wipeout ever recorded. This, therefore, caused a massive reaction in the market of fear.

Related Reading: Crypto News: Trump to Meet China’s President on October 30 Amid Rising Tensions | Live Bitcoin News

The overall trade picture is now much more positive. The United States Treasury Secretary Scott Besser recently spoke. He said that the U.S. and China made “substantial” progress. This development relates to a trade deal regime in general. Consequently, this news generated a high hope in investors. A renewed bull market is a likely possibility at this time.

Furthermore, the proposed framework will also tend to abolish tariffs. These tariffs of 100% were announced previously. President Donald Trump’s threat of tariffs was made on October 10. Bessent made sure they were never used in the framework. He credited the leverage that President Trump had given him. Thus, one of the most important risk factors is rapidly declining.

Bessent’s remarks come after weeks of de-escalation. This positive trend culminated in an important meeting. President Trump will shortly meet with President Xi Jinping. They will be gathering for an APEC summit on October 31. Thus, this successful encounter strengthens the expectations of a ceasefire. Therefore, the geopolitical risk is diminishing drastically. In the end, this stability allows risk assets to grow.

Inflation Slowdown Boosts Odds of Fed Rate Cuts

The other key move is a strong impetus for the anticipated rally. Now, this is what a Federal Reserve is all about. The central bank will want to be comfortable lowering interest rates this year. Traditional risk assets such as crypto are easily boosted when rates are lower. Furthermore, the economic data is consistent with such an option. This gives the central bank flexibility in the near future.

In particular, a Fed cut recently became much more likely. This was following the release of new inflation results by the U.S. The data was slightly lower than analysts’ estimates on the whole. Consequently, inflation pressures seem to be abating at present. This is an indication that the price growth could be at its highest point. The current trend is positive for crypto.

In particular, the headline Consumer Price Index (CPI) increased a bit. It went from 2.9 percent in August to 3 percent in September. Importantly, this figure was less than the median of 3.1%. This small error had immediate significance for the markets. Further, the core inflation numbers were also positive.

Tom Lee, the famous permabull, is still bullish. He thinks these macro factors are important because they provide a solid foundation. The easing of global trade tensions have a significant negative effect on global uncertainty. Furthermore, rate cuts provide much-needed liquidity and fuel. The sum of these two forces is a force pointing upwards. Thus, the technical outlook becomes better.