What Happened?
Bitcoin has risen for two consecutive days recently, mainly due to optimistic news from the US-China trade talks. The market believes that the relationship between the two countries may improve, increasing the willingness and atmosphere for investing in higher-risk assets, stimulating buying.
Bitcoin Rides the Wave to Reach $97,700
Recently, the price of Bitcoin has shown an upward trend for the second consecutive day. This is mainly due to the optimistic sentiment in the market about the possibility of easing trade tensions between the US and China, which has increased interest in risk assets such as stocks and cryptocurrencies.
The most direct reason is the news that the US and China, the world’s two largest economies, seem to be showing signs of improvement in their trade relationship.
The high-ranking officials responsible for finance and trade in the United States will meet with officials from China in Switzerland this week. The market expects positive results from this meeting to help ease the tense trade relationship.
When these two major economies are willing to sit down and talk, reducing trade friction can make investors feel more at ease and more willing to invest in assets that may have higher returns but also higher risks, such as stocks or cryptocurrencies like Bitcoin. Money is more willing to flow into these areas, making prices easier to rise.
US-China Trade Talks + Fed Decision: Two Key Factors Affecting Bitcoin Market
Although there have been military actions between India and Pakistan at the same time, market observers say that cryptocurrency traders do not seem to be significantly affected by such geopolitical events, with the main focus still on the macroeconomic and trade levels.
However, in addition to the good news about US-China relations, another key figure that everyone is paying close attention to and has a huge impact on the market is the interest rate decision announced by the Federal Reserve Board (Fed).
The Federal Reserve Board of the United States has an important meeting this Wednesday to announce their latest interest rate decision. Although the vast majority of the market expects the Federal Reserve Board of the United States to decide to “maintain the current interest rate unchanged” this time, that is, not to raise or lower interest rates, the real focus is on the statements made by ### Powell, the chairman of the Federal Reserve Board of the United States, after the meeting.
Investors will carefully listen to his remarks and “tone” to try to speculate on the Fed’s views on future economic and interest rate policies. In particular, they want to know whether the Federal Reserve Board of the United States leans towards the “dovish” side, which may lower interest rates in the future, or prefers to maintain higher interest rates to control inflation, known as the “hawkish” side.
Before this meeting, market expectations for the Federal Reserve Board of the United States to cut interest rates starting in 2025 have actually decreased significantly.
Analysts point out that the current market view of the Federal Reserve Board of the United States “soon” cutting interest rates is “clearly pessimistic.” For example, the chance that the Federal Reserve Board of the United States may cut interest rates in June this year has now dropped to about 30%.
Therefore, if the Federal Reserve Board of the United States unexpectedly announces a rate cut at a time when no one expects it, it may trigger severe market volatility or panic.
In conclusion, the recent rise in Bitcoin is mainly due to catching the tailwind of the “possible improvement in US-China trade relations,” shifting the market sentiment to optimism. However, next, all investors’ attention will be focused on the US Fed, their statements, and their attitude towards future interest rates, which will be the most important factor in determining the short-term direction of Bitcoin and the entire cryptocurrency market.