Cryptocurrency markets have staged a recovery after a record $19 billion liquidation event, buoyed by signs of a temporary ceasefire in the US-China trade war. Bitcoin (BTC) briefly recovered above a two-week high of $116,400 on Monday, driven by investor expectations of two significant macroeconomic catalysts this week: the incoming Federal Open Market Committee’s (FOMC) interest rate decision on Wednesday and a potential trade deal between the US and China, which could come as soon as Thursday.
Crypto investor sentiment staged a recovery Monday from “fear” to “neutral” territory after reports emerged that the US and China had reached a “preliminary” framework for an import tariff deal.
The rebound comes just days before US President Donald Trump and Chinese President Xi Jinping are set to meet on Thursday to discuss trade negotiations aimed at preventing further escalation between the world’s two largest economies.
“Recent optimism surrounding the US-China trade negotiations helped ignite a weekend rally in Bitcoin. Signs of progress have lifted broader risk sentiment,” Wenny Cai, co-founder and chief operating officer at crypto derivatives trading platform SynFutures, told Cointelegraph.
US and China Closer to a Trade Deal, According to President Trump
Adding to the growing investor appetite, Trump said that he is optimistic the two nations will “come away with the deal” after Thursday’s meeting, according to a statement made aboard Air Force One on Monday, CNBC reported.
The sign of de-escalation helped Bitcoin recover above the key short-term holder (STH) cost basis of about $114,000 for the first time since Trump’s renewed tariff threats resulted in the $19 billion crypto market crash at the beginning of October.
Reclaiming this level is crucial for Bitcoin's recovery, as the STH cohort is more sensitive to short-term price fluctuations. Bitcoin's sustained momentum under this level often invites significant selling pressure from these holders.
On Oct. 10, President Trump said he would impose a 100% tariff on Chinese imports effective Nov. 1, unless a trading deal was reached.
“[...] starting November 1st, 2025 (or sooner, depending on any further actions or changes taken by China), the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying,” wrote Trump in an Oct. 10 Truth Social post.
Crypto markets saw a record $19 billion liquidation event on the weekend after Trump’s announcement, which resulted in Bitcoin briefly crashing to $104,000 by Oct. 17, the following week.
Federal Reserve Rate Decision Expected to Boost Risk Assets
Wednesday’s upcoming interest rate decision is also fueling more demand for risk assets, including crypto. Markets are now pricing in a 96.7% chance of a 25-basis-point interest rate cut by the Federal Reserve, according to the CME Group’s FedWatch tool.