Bitcoin Price Awaits Fed Clarity Following Constructive US-China Trade Talks

Bitcoin and the broader crypto market remained at a standstill on Tuesday, even as constructive diplomatic discussions unfolded in Stockholm between the U.S. and China.

Beijing's top trade official, Li Chenggang, reportedly said both sides agreed to work on extending a pause in tariffs beyond the August 12 deadline. The U.S. Treasury Secretary Scott Bessent, however, clarified that such an extension was discussed but “not decided.”

A 90-day tariff pause remains intact, with a 30% tariff on Chinese goods imported by the U.S. and 10% on U.S. goods entering China. 

Although not officially on the agenda for these talks, President Donald Trump separately signaled a potential meeting with Chinese President Xi Jinping. 

Trump said that he “may go to China” only “at the invitation of President Xi, which has been extended.”

Despite the constructive tone, the U.S.-China trade outlook remains fluid with no concrete resolution. Consequently, the crypto market will likely intensify its focus on upcoming events.

“It's a pivotal week on the macroeconomic front,” Daniel Liu, CEO of Republic Technologies, told Decrypt.“A string of favorable macro headlines could catalyze a sharp move” for crypto.

Bitcoin's price has witnessed a slight drawdown following the Stockholm talks. As of late Tuesday, Bitcoin price is trading around $118,000, down slightly from the previous day's high of $119,258, according to Coingecko data.

The impact of trade policy on risk assets has not gone unnoticed in recent months, with crypto acting as a high-beta to U.S. equities and their subsequent see-sawing as Trump proposes and then backtracks on tariffs.

Economists argue sweeping tariffs proposed by the White House could exacerbate the Federal Reserve’s fight against inflation, which has run high in the U.S. and globally in recent years.

All eyes are now on the Fed’s upcoming interest rate decision on Wednesday at 2 PM ET. While market odds for a July rate cut remain low at 3.1%, according to the CME’s FedWatch tool, September odds show a 65.4% chance of a cut. 

Lower interest rates typically create a more favorable environment for risk assets as they make borrowing cheaper, incentivizing investment in higher-return holdings like cryptocurrencies or stocks over traditional, lower-yield options like bonds. 

Traders will be closely monitoring Federal Reserve Chair Jerome Powell's tone during the upcoming FOMC meeting. Signs of "economic weakness" could strengthen "rate cut odds," Liu explained.