Financial markets experienced a notable rebound on Sunday following positive signals from Washington and Beijing regarding ongoing trade negotiations. This shift in sentiment quickly extended to the cryptocurrency market, with major digital assets showing significant gains.
Bitcoin climbed back above $113,600 on Sunday, while Ethereum surpassed the $4,000 mark. Solana also saw a substantial increase, jumping over 3.5% to approach $200. This recovery reflects a welcome pause in the escalating tensions between the world's two largest economies, a development the crypto market had not witnessed for several weeks.
A Tentative Truce
US Trade Representative Jamieson Greer stated in Kuala Lumpur on Sunday that trade negotiations with China were "moving toward a point where the leaders will have a very productive meeting." This suggests that a preliminary framework is being prepared for Presidents Donald Trump and Xi Jinping to review during their upcoming meeting in South Korea.
Greer confirmed that discussions addressed rare-earth exports and critical minerals supply chains, areas that had become contentious following President Trump's threat of 100% tariffs on Chinese goods earlier in the month. This dispute had caused significant volatility in global markets, briefly wiping out trillions from global equities as investors braced for further trade retaliation. The crypto market was particularly affected, losing over $20 billion within hours of the announcement. However, Sunday's developments indicated a move towards compromise from both sides.
Treasury Secretary Scott Bessent informed reporters that the two countries had reached an agreement on a framework designed to prevent tariff escalation and facilitate further discussions. This diplomatic reset provided a much-needed reprieve that global investors were quick to acknowledge.
Crypto Market Cheers De-Escalation
The market's reaction was immediate: Bitcoin rose by 2%, while Ether and Solana increased by 3.4% and 3.5%, respectively, as risk appetite returned. The crypto market had previously borne the brunt of the volatility earlier in the month. President Trump's October 10 announcement of potential tariffs triggered a global sell-off, leading to a $1.2 trillion loss in value for the S&P 500 within 40 minutes. Simultaneously, Bitcoin plunged over 10%, erasing $200 billion in crypto market capitalization within hours.
Sunday's reversal suggests that investors believe the threat of tariffs has served its purpose and that the upcoming meeting will yield positive outcomes.
Why It Matters
The US-China trade relationship remains a critical factor in the global supply chain narrative and, consequently, in the risk sentiment that the crypto market now reflects. When the two economies shift from confrontation to dialogue, investor sentiment typically moves from a protective stance to one of participation. The tariff news had previously fueled the strongest dollar rally since mid-summer and briefly pushed 10-year Treasury yields above 4.7%, a level that negatively impacted risk assets, including Nasdaq tech stocks and DeFi tokens.
Greer's comments were therefore significant. Markets did not require a definitive deal but rather a de-escalation of tensions. For the crypto market, which often acts as a macro proxy for liquidity conditions and investor fear, a moderation in rhetoric was sufficient to shift momentum. At the time of writing, Bitcoin was trading around $113,500, maintaining its strongest level in ten days. Ethereum climbed above $4,000, and altcoins followed suit, with Solana approaching $199 and Cardano rising nearly 3%. Among the larger-cap coins, Hyperliquid emerged as the top performer, with a substantial 14.6% gain, pushing the HYPE price above $47.
A Fragile Calm
Despite the relief rally, strategists have cautioned against excessive optimism. The forthcoming meeting between Trump and Xi in South Korea could still fall short of establishing a lasting truce. Both leaders face domestic pressures: Trump aims for manufacturing wins ahead of the 2026 congressional races, while Xi needs to project strength amidst a slowing Chinese economy.
For the crypto market, future performance will significantly depend on the Federal Reserve's interest rate outlook and the trajectory of the US dollar. If tariff concerns subside and liquidity conditions improve, risk assets like Bitcoin could potentially see further gains before the end of the year.
Sunday's signaled truce represents more than just a headline; it marks a turning point in the complex interplay between monetary policy and market dynamics, where global events and policy decisions can move trillions of dollars. If the crypto market serves as a barometer for macro sentiment, then this week's bounce is largely driven by relief rather than excessive greed.