The cryptocurrency market witnessed a dramatic volatility today, driven by major geopolitical events. Following the announcement of a trade deal between the US and China after a highly anticipated meeting between Donald Trump and Xi Jinping in South Korea, Bitcoin experienced a flash crash, dropping to $107,900 before rebounding strongly to trade around $110,800.
According to President Xi Jinping’s statements, this diplomatic breakthrough is no coincidence. Since Donald Trump ‘s election, the two leaders have maintained close communication through three phone conversations and multiple letter exchanges, jointly guiding US-China relations toward overall stability.
More recently, the economic and trade teams from both countries met in Kuala Lumpur, where they reached a basic consensus on each party’s major concerns, laying the foundation for today’s agreement.
The terms of the agreement mark a significant de-escalation in the trade war. Key points include an overall reduction in China tariffs from 57% to 47%, and a lowering of fentanyl taxes to 10%. In exchange for Beijing’s commitment to combat its spread.
On the commercial front, a one-year agreement has been concluded on rare earths and minerals. Strategic resources of which China is the world’s leading producer. Beijing has committed to resuming American soybean purchases and lifting its restrictions on rare earth exports. Discussions with Trump will also continue regarding restrictions on high-tech chips such as those from Nvidia.
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Bitcoin‘s initial reaction was a brutal wave of selling, a classic “sell the news” scenario where traders take profits after a period of anticipation. The price dropped several thousand dollars in minutes, reaching a low of $107,900. This purge liquidated numerous leveraged positions, exacerbating the decline.
However, once the dust settled, the market began to digest the positive implications of the agreement. The reduction in geopolitical tensions and the prospect of greater economic stability are fundamentally bullish for risk assets, with Bitcoin leading the charge.
The rapid and powerful rebound to $111,800 shows that investors ultimately interpret this agreement as a confidence booster. As Xi Jinping highlighted in a maritime metaphor, as “helmsmen of US-China relations,” he and Trump must “stay the course and steer the ship of US-China relations forward steadily.” This newfound stability could well be the necessary fuel for the next stage of the crypto bull run.
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Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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