Following weeks of trade tension between the US and China, the parties have announced an agreement after high-level talks in Geneva, Switzerland. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer revealed the news in a joint statement on Sunday. The joint announcement was scheduled for release on Monday.
Global Impact of the Trade Agreement and Reflections on Bitcoin
The trade war between the US and China had escalated inflation risks in the global economy, with tariffs exceeding 100% in recent weeks. March’s favorable US inflation data was previously considered outdated by investors and analysts, as it did not fully reflect the rising trade tensions. Experts now point out that this view might no longer hold true given recent developments.
The April Consumer Price Index (CPI) data yet to be released in the US could confirm a slowdown in inflation, potentially increasing the likelihood of a Federal Reserve interest rate cut. According to analysts, such an outcome could pave the way for new record highs in Bitcoin 
$77,196 prices. On the other hand, inflation readings exceeding expectations may still allow the market to benefit from the easing trade tensions.
Market Expectations and Movements in Cryptocurrencies
Analysts at RBC expect headline inflation to decrease to 2.3% annually in April. Core inflation, excluding food and energy, is projected to remain steady at 2.8%. Meanwhile, 10x Research suggests that the general market expectation is for inflation to remain unchanged at 2.4% in April.
Markus Thielen, founder of 10x Research: “If this expectation is met, markets may react positively. In the absence of negative tariff news, the inflation data this week could support an upswing.”
Bitcoin is trading around $104,000 at the time of writing, just 5.1% shy of a new record. The cryptocurrency has shown a rapid recovery from its early April price of $75,000, with a 10% rise last week fueled by continued investments in spot ETFs.
ETF Flows and Developments in Other Cryptocurrencies
Investment firm BlackRock’s spot Bitcoin ETF (IBIT) experienced net inflows for 20 consecutive trading days, amassing over $5 billion in assets. The Federal Reserve maintained its policy rate at 4.25% – 4.5%, with future steps reliant on economic data. Jerome Powell, the Chairman, expressed optimism in monetary policy, viewing trade tariffs as having a short-term inflationary impact.
Significant gains were observed in leading cryptocurrencies like Ether, which surged by 39% last week to reach $2,500. Other major digital assets followed a similar upward trend; XRP rose by 9.7%, DOGE by 56%, ADA by 19%, and SOL by 20%.
Market data from HTX Research indicate that speculative actions in crypto trading remain restrained. Implied volatility in Bitcoin options remains steady at 50-55%, while open interest in CME Bitcoin futures stays at $14.8 billion, below the 2020 US election peak of $20 billion.
HTX Research statement: “As long as yields don’t exceed 4.8% and ETF inflows continue, Bitcoin is likely to consolidate in the $105,000-115,000 range, awaiting the next breakout opportunity.”
The easing tensions between the US and China, coupled with signs of slowing inflation, could spark increased activity in cryptocurrency markets. Analysts suggest that the Federal Reserve’s policy actions and investor inflows may play crucial roles in testing new peaks for Bitcoin and prominent altcoins. Near historic highs, Bitcoin captures investor attention while they focus on global economic developments and US inflation data. Despite low overall volatility in cryptocurrencies, a new speculative cycle is yet to commence.
