The recent resolution of the US-China tariff conflict raised hopes for a bullish turn in the cryptocurrency market, a sector that has been under pressure for much of October. Despite this encouraging development, Bitcoin experienced a decline of 1.72% last week, reflecting a troubling trend in the crypto space. In addition to Bitcoin, Ethereum and Solana (SOL) also faced downturns, falling 2.55% and 4.76%, respectively.
The period between October 29 and 30 was particularly significant for crypto investors, coinciding with the Federal Reserve meeting and a high-stakes summit involving U.S. President Donald Trump and Chinese President Xi Jinping. At the summit, China agreed to three major concessions to the U.S., including a one-year delay on restrictions regarding rare earth exports and a revival of soybean imports. In return, the U.S. committed to reducing the overall tariff rate on China from 57% to 47%. The leaders also discussed reciprocal visits set for the following year.
While traditional safe-haven assets like gold responded positively to this easing of geopolitical tensions—seeing its price settle around $3,990 per ounce by the weekend—the crypto market did not mirror this positive sentiment. Bitcoin, as of Sunday evening UTC, was trading near $110,000, marking a 9.4% decline since October 10 when its price was significantly higher. Analysts suggest that Bitcoin’s lackluster performance is a result of the momentum lost after a sharp crash that took place earlier in the month, during which around $19 billion in leveraged positions were liquidated.
The Federal Reserve’s decision to lower the benchmark interest rate by 0.25 percentage points and terminate its Quantitative Tightening program effective December 1 could have been seen as a boon for risk assets; however, Chairman Jerome Powell introduced a note of caution. His comments about the likelihood of no rate cut in December dampened market expectations, causing a significant drop in Bitcoin’s price immediately after his statement. Prior to Powell’s remarks, the CME FedWatch tool had indicated a 91.5% probability of a December rate cut; this figure plummeted to 55% in light of his comments.
Support for Powell’s position came from multiple Federal Reserve officials, including Atlanta Fed President Raphael Bostic, who noted the diversity of opinions within the Fed regarding future rate policy. This has led to renewed uncertainty about the outlook for monetary easing, raising the stakes for macroeconomic indicators such as inflation and employment data.
The upcoming week is set to be pivotal, with a slew of employment reports scheduled to be released, including the JOLTs Job Openings and Labor Turnover Survey, ADP Nonfarm Employment, Unemployment Claims, and the Michigan Inflation Expectations Index. Strong jobs data could bolster the case for holding interest rates steady in December.
Market participants will also be paying attention to statements from key Fed officials, which are likely to influence market dynamics as uncertainty lingers. The Altcoin Season Index, a metric of crypto market sentiment, has dropped to 41, indicating a level of uncertainty not seen since early August.
