Alarms started ringing for cryptocurrencies in the middle of last week and we mentioned that the risk was increasing. Signals similar to those given by Trump before bigger threats came on Wednesday and Thursday. Then came the statements that triggered the big decline, and the crypto fell upside down, sparking the correction it had been waiting for. So what’s the latest situation? Treasury Secretary Bessent makes statements.
US and China Tension
US Treasury Secretary Bessent discussed the issue of China, which is extremely important for cryptocurrencies. There is a negotiation process between the two countries that negatively affects global trade and periodically turns into war. China warned many countries last week and previously tried to make agreements with some countries based on various sacrifices. The USA is having difficulty finding middle ground with China, which is accelerating its preparations on trade against it.
Treasury Minister Bessent said the following in his ongoing statements on this subject;
“China is trying to fill the narrative on rare earths. The Chinese were planning to create new obstacles, we do not want escalation. Li, the low-level Chinese trade official, had lost his footing in August.
There are many levers the United States can use on China trade. We don’t want to leave China. This is China’s stance towards the world.
We are optimistic about China, we are in communication now. We will respond as a group against China. “The trust between Trump and Xi is one reason why this situation has not escalated.” –Bessent
So what is the status of the negotiation process?
“We will not negotiate just because the stock markets are falling. We are negotiating to do what is best for the United States. Stock markets will not affect negotiations with China. I will meet with China’s He Lifeng before the Xi-Trump meeting. When you face a country like China that is not a market economy, you need industrial policy.” –Bessent
What Will Happen to Cryptocurrencies?
We have seen many times that steps that increased tension after the market close were then normalized by the Trump administration. Therefore, last week’s decline was a good buying opportunity for experienced investors, and even if they sold today, they would have made double-digit gains. But it is really difficult for those who panic.
This is how China and the USA will periodically increase the tone of tension between them. However, neither China nor the USA can give up on China. Bessent’s recent statement that “we will ensure that the markets are not affected by the negotiations” is also a supporting detail for cryptocurrencies. The expectation that the Fed will continue to reduce interest rates is also strong, so cryptocurrencies can finish October well if there is no other threat outbreak on the Russian side.
