The Bitcoin recovery in 2025 is fueled by growing optimism around a potential US-China trade deal, easing fears from a recent $19 billion liquidation event. This shift has pushed investor sentiment from fear to neutral, with BTC briefly topping $116,400 amid expectations for the FOMC rate decision and tariff talks.
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Trade deal progress: Reports of a preliminary framework between the US and China have sparked a weekend rally in Bitcoin prices.
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Investor sentiment rebound: The crypto market has moved from fear to neutral, supported by de-escalation signals ahead of key meetings.
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Macro catalysts: A 96.7% chance of a Federal Reserve rate cut and Thursday’s tariff discussions are boosting risk assets like BTC, with short-term holder cost basis reclaimed at around $114,000.
Discover how the Bitcoin recovery is gaining momentum amid US-China trade optimism and Fed rate cut expectations. Stay ahead in crypto with insights on market rebound and future catalysts.
What is causing the Bitcoin recovery amid US-China trade tensions?
The Bitcoin recovery is largely attributed to renewed investor confidence following signs of progress in US-China trade negotiations. After a massive $19 billion liquidation event triggered by tariff threats, markets have stabilized as reports of a preliminary deal framework emerged. This optimism, combined with anticipation for the Federal Open Market Committee’s interest rate decision, has driven BTC prices above key levels like $116,400, marking a shift from fear to neutral sentiment.
BTC/USD, 24-hour chart. Source: Cointelegraph
How has the US-China trade deal optimism impacted crypto sentiment?
Optimism surrounding the US-China trade talks has significantly lifted crypto market sentiment, with Bitcoin leading the charge after dipping to $104,000 following the liquidation cascade. Industry experts note that de-escalation signals have encouraged risk-taking, as the two largest economies edge closer to a framework that could avert further tariffs. Wenny Cai, co-founder and chief operating officer at SynFutures, a crypto derivatives trading platform, stated that recent progress in negotiations ignited a weekend rally, enhancing broader risk appetite. Data from on-chain analytics shows Bitcoin reclaiming the short-term holder cost basis of approximately $114,000, a critical threshold where sustained prices below this level typically trigger selling from sensitive investors. This recovery aligns with historical patterns where macroeconomic positives, such as trade resolutions, bolster digital assets. According to CME Group’s FedWatch tool, markets now assign a 96.7% probability to a 25-basis-point rate cut by the Federal Reserve on Wednesday, further fueling demand for high-risk investments like cryptocurrencies. The interplay of these factors underscores the crypto market’s sensitivity to global trade dynamics, with total market capitalization rebounding as liquidation pressures ease.
US President Donald Trump expressed strong confidence in reaching a deal during Thursday’s meeting with Chinese President Xi Jinping, a statement made aboard Air Force One, as reported by CNBC in plain text format. This rhetoric has contributed to the positive momentum, helping Bitcoin surpass resistance levels not seen since early October’s downturn.
Source: Checkonchain
On October 10, Trump announced plans for a 100% tariff on Chinese imports starting November 1, unless an agreement was secured, escalating tensions that led to the weekend’s record liquidations. Trump’s Truth Social post detailed the threat, stating that the United States would impose the tariff over and above existing ones, depending on China’s responses.
Source: President Donald Trump
The subsequent market crash saw Bitcoin plummet, but the latest developments suggest a turning point. Analysts from platforms like Glassnode highlight that short-term holders, who dominate trading volume, are now positioned for potential gains as sentiment stabilizes. Broader implications include increased institutional interest, with reports indicating traditional finance entities exploring Bitcoin-backed lending options. JPMorgan’s reported plans to allow clients to borrow against Bitcoin and Ether holdings exemplify this trend, potentially injecting more liquidity into the space. As the FOMC meeting approaches, traders are monitoring for any dovish signals that could amplify the Bitcoin recovery. Historical data from similar trade war phases shows crypto often outperforms during resolutions, with average gains of 20-30% in the following weeks based on past cycles analyzed by firms like Chainalysis.
Frequently Asked Questions
What triggered the $19 billion crypto liquidation event in October 2025?
The $19 billion liquidation was sparked by US President Trump’s October 10 announcement of 100% tariffs on Chinese imports if no trade deal materialized by November 1. This escalated US-China tensions, causing panic selling and leveraged position closures across exchanges, driving Bitcoin down to $104,000 temporarily.
Will the US-China trade deal boost Bitcoin prices long-term?
A successful US-China trade deal could provide sustained support for Bitcoin by reducing global economic uncertainty and encouraging investment in risk assets. With Thursday’s meeting on the horizon and Fed rate cuts likely, experts anticipate upward pressure on BTC, potentially targeting $150,000 if macroeconomic conditions improve steadily.
Key Takeaways
- Trade optimism drives recovery: Preliminary US-China deal signs have shifted sentiment, pushing Bitcoin above $116,400 after the liquidation shock.
- Fed rate decision key: A probable 25-basis-point cut on Wednesday is enhancing appetite for crypto, aligning with historical bullish patterns post-easing.
- Monitor short-term holders: Reclaiming the $114,000 cost basis reduces selling risks, signaling stronger momentum ahead of tariff talks.
Conclusion
The Bitcoin recovery amid US-China trade deal optimism marks a pivotal moment for cryptocurrency markets in 2025, transitioning from volatility induced by tariff threats to cautious positivity. With the FOMC’s rate decision and Thursday’s negotiations as focal points, investors should watch for de-escalation cues that could solidify gains. As global trade dynamics evolve, staying informed on these catalysts will be essential for navigating the evolving crypto landscape effectively.
