With the Federal Reserve refraining from major liquidity support, global markets are left in a delicate balance as trade relationships shift and the cryptocurrency industry experiences turbulence. Even after the central bank’s recent 25-basis-point rate reduction and the end of its quantitative tightening (QT) phase, assets such as
Bitcoin
and
Ethereum
continue to face downward pressure, as investors assess the impact of U.S.-China trade negotiations and evolving digital finance regulations.
The summit between Trump and Xi in Busan, South Korea, represented a significant yet measured move toward easing trade friction. The U.S. lowered tariffs on Chinese goods from 57% to 47% and obtained promises from China to restart rare earth exports and strengthen controls on fentanyl shipments, according to
a Bitget report
. Despite these developments, market reactions were muted, with the Shanghai Composite pulling back from a ten-year peak and U.S. soybean futures weakening. Experts pointed out that while the agreement was notable, it did not meet hopes for a full rollback of fentanyl-related tariffs, which dampened optimism, the Bitget report stated.
Meanwhile, the Fed’s more accommodative stance has not yet sparked a clear shift toward riskier assets. Although ending QT should, in theory, improve liquidity, Chair Jerome Powell’s comments introduced uncertainty by indicating that a rate cut in December is not assured, as
Cointelegraph reported
. “There is no predetermined path for policy,” Powell said, referencing differing opinions among FOMC members and information gaps caused by the extended government shutdown, according to
an FXStreet analysis
. This lack of clarity has led to over $1.1 billion in crypto market liquidations, with Bitcoin dropping below $108,000 and Ethereum falling under $3,900,
Coinotag reported
.
Adding to these challenges, the crypto industry stands at a regulatory turning point. The Senate Agriculture Committee is set to introduce a bill on crypto market structure, aiming to clarify the CFTC’s role in overseeing digital commodities and expanding its reach to spot and derivatives markets,
Blockonomi reported
. At the same time, institutional involvement is increasing: Wyden’s inclusion of Nomura-backed Laser Digital in his liquidity network highlights the rising demand for regulated digital asset access,
FinanceFeeds reported
. These developments reflect broader industry trends, with companies like dYdX preparing to enter the U.S. market with lower-fee spot trading,
CryptoNewsZ reported
, taking advantage of new rules that recognize sufficiently decentralized networks as non-securities, according to Investing.com.
Still, confidence is cautious. Michael Saylor of MicroStrategy forecasts that Bitcoin could climb to $150,000 by the end of 2025, fueled by institutional participation and a maturing derivatives market,
Coinotag reported
, but near-term indicators point to continued volatility. The trade agreement between Trump and Xi, while important symbolically, has not yet stabilized supply chains or eased inflation, limiting central banks’ ability to loosen policy further, the Bitget report observed. For cryptocurrencies, the lack of a strong liquidity boost—along with ongoing geopolitical uncertainties—suggests that any sustained rally will depend on continued regulatory progress and stable macroeconomic conditions, as Cointelegraph noted.
