Digital assets exploded Saturday night after an encouraging sign from U.S.-China trade talks that took place in Geneva. Bitcoin, Ethereum and Dogecoin realized unbelievable increases. Investors, as you might expect, warmly welcomed the prospect of at least a partial de-escalation in the trade war.
In a strong signal of crypto-market sentiment, prices jumped at the prospect of stepped-up US-China trade dialogue. Rather, the gains are a narrow shot of exuberance from a nervous market still jittery about the efficacy of U.S. economic policy, especially as it relates to trade.
Trade Talks in Geneva
Secretary of U.S. Treasury Scott Bessent and Chinese Vice Premier He Lifeng engaged in prolonged talks. They convened at Geneva’s Villa Saladin. The contentious trade discussions, lasting a total of ten hours, dealt with key issues that have recently frayed economic ties between the two countries.
Since 2018, the U.S. and China have been embroiled in a trade war characterized by increasing tariffs and other escalating retaliatory actions. The trade conflict escalated further when the U.S. increased tariffs on Chinese imports up to a shocking 145%. As a knee-jerk reaction, China responded by placing a 125% tariff onto American products. These trade restrictions have now impacted an estimated $660 billion in transactions.
"A very good meeting today with China, in Switzerland. Many things discussed, much agreed to. A total reset negotiated in a friendly but constructive manner. We want to see, for the good of both China and the U.S., an opening up of China to American business. GREAT PROGRESS MADE!!!" - Donald Trump
Negotiations are expected to go through Sunday. Either side is going to want to come to the table on trade imbalances and market access.
Crypto Market Surge
Bitcoin (BTC) surged over $104,900, up over 2% on the day. Ethereum jumped on the bandwagon, too, advancing by more than 10% and breaking through $2,600. Dogecoin was the biggest winner among the top cryptos, soaring 21% to close just under $0.25.
That momentum across the crypto market was bolstered even more by an influx into Bitcoin ETFs that saw a whopping $142 million, making for six straight weeks of inflows. This tidal wave of capital more than anything serves as a signal of the institutional interest and faith in digital assets.
Impact of Trade War
And the ongoing U.S.-China trade war continues to have a domino effect, sending reverberations through many sectors and markets around the world. As part of this tariff strategy, China was recently hit with a 20% import tax on their fentanyl exports to the United States. The other 125% levy comes from deeply held grievances, dating back to the late 2000s, over Chinese market access restrictions and industrial policy.
Their escalating trade war has taken a dire toll on the state of trade between them. Further, they have firmed up perma-uncertainty in global supply chains and refracted much of the world’s FDI. Putting an end to the trade war is one of the fastest ways to offer the global economy a multitrillion dollar stimulus. It would foster a more stable environment for international trade.
