What Happened?
Bitcoin has recently risen for two consecutive days, primarily due to optimistic news from the US-China trade dialogues. The market perceives a potential improvement in the relationship between the two countries, which has enhanced the willingness and atmosphere for investing in higher-risk assets, stimulating buying interest.
The Federal Reserve’s (Fed) interest rate decisions and ### statements regarding future policies are key focal points for the market moving forward. Although it is expected that the interest rates will remain unchanged this time, how the Fed describes the future trajectory of interest rates (whether “dovish” or “hawkish”) will significantly influence capital flows and market preferences for risk assets. Currently, the market’s expectations for a quick rate cut by the Fed have turned pessimistic.
Bitcoin Rises to $97,000
Recently, the price of Bitcoin has shown an upward trend for the second consecutive day. This is mainly attributed to the market’s optimistic sentiment regarding the potential easing of trade tensions between the United States and China, which has increased interest in risk assets such as stocks and cryptocurrencies.
The most direct reason is that news has emerged that brings relief to everyone: the trade relationship between the United States and China, the two largest economies in the world, seems to show signs of improvement.
Senior officials responsible for finance and trade in the United States will travel to Switzerland this week to hold talks with Chinese officials. The market is hopeful that these discussions will yield positive outcomes, alleviating the previously tense trade relations.
When these two major powers are willing to sit down and have meaningful discussions, the possibility of reducing trade friction makes investors feel more secure and more willing to invest in higher-yielding but relatively risky assets, such as stocks or cryptocurrencies like Bitcoin. Money becomes more inclined to flow into these areas, making prices easier to rise.
Market analysis indicates that as optimism surrounds the trade negotiations, Bitcoin’s buying interest has rebounded. Experts point out that the market “seems to be optimistic about the trade negotiations this weekend.”
Data also shows that in the derivatives market, trading activity related to bullish options for Bitcoin price increases, especially those with target prices set at $100,000, has increased. The market generally displays a “risk appetite sentiment,” which typically benefits the performance of assets like stocks and cryptocurrencies.
In this wave of optimism, Bitcoin surged over 3% on Wednesday (the 7th), reaching a price of over $97,700. Other cryptocurrencies, such as Ethereum, the second-largest by market capitalization, also rose approximately 4.2%.
US-China Trade Negotiations + Fed Decisions: Two Key Factors Influencing Bitcoin
Despite concurrent military actions between India and Pakistan, market observers indicate that cryptocurrency traders currently do not seem significantly affected by such geopolitical events, with the primary focus still centered on macroeconomic and trade aspects.
However, beyond the good news regarding US-China relations, another crucial player that everyone is paying close attention to, and which has a significant impact on the market, is the interest rate decision announced by the Federal Reserve.
One of the main tasks of the Federal Reserve is to influence the entire country’s economic activity by adjusting “interest rates.” These rates also indirectly affect the value of stocks, real estate, and investment assets like Bitcoin.
The Federal Reserve has an important meeting this Wednesday to announce its latest interest rate decision. Although the vast majority of the market expects the Federal Reserve to decide to “maintain the current interest rates,” meaning no rate hike or cut, the real focus is on the statements made by ### Powell during the post-meeting press conference.
Investors will carefully listen to his remarks and “tone,” trying to gauge the Fed’s perspective on future economic and interest rate policies. In particular, they want to find out whether the Federal Reserve leans towards a “dovish” stance of possibly lowering rates in the future or a “hawkish” stance of maintaining high rates to control inflation.
Before this meeting, market expectations for the Federal Reserve to start cutting rates in 2025 have already clearly declined.
Some analyses have pointed out that the market’s views on the Federal Reserve’s potential for a “quick” rate cut have become “clearly pessimistic.” For instance, the previous expectations that there would be a chance of a rate cut by the Federal Reserve in June have now dropped to about 30%.
Therefore, if the Federal Reserve unexpectedly announces a rate cut when everyone believes it is unlikely, it could trigger significant market volatility or panic.
Bitcoin reached a record high of $109,241 in January this year, and President Trump’s public support for cryptocurrencies brought optimism to the market. However, in recent months, Trump’s comprehensive tariff plan and resulting market turbulence have continuously depressed cryptocurrency prices.
Reviewing the price trend, Bitcoin has recently rebounded, although it previously dipped below $94,000, marking a seasonal low in May. Like gold, Bitcoin’s price has exhibited significant fluctuations recently, reflecting the impact of macroeconomic events.
Experts remind that before the Federal Reserve announces its decisions, some recent buy and sell orders in the market have been cleared, which may indicate that everyone is waiting and observing. They also mention that $93,500 will be a critical price level; if Bitcoin falls below this price, caution should be exercised as it may continue to decline.
In summary, Bitcoin’s recent surge is primarily attributed to the positive sentiment surrounding the “potential improvement in US-China trade relations,” leading the market atmosphere to turn optimistic. However, all investors’ attention is now focused on the Federal Reserve, as their statements and attitudes towards future interest rates will be the most crucial factors determining the direction of Bitcoin and the entire cryptocurrency market in the short term.
Reference: Bloomberg, Cointelegraph