The crypto market suffered the largest liquidation in history last Friday, with an estimated $19 billion in positions wiped out. Stock markets also suffered heavily, losing more than $2.5 trillion in market capitalization. It now appears that the panic was largely caused by a misunderstanding between Donald Trump and Xi Jinping.
What happened?
According to new reports from The Kobeissi Letter, news of China’s export controls on rare earths broke as early as around 8:30 a.m. (ET) on October 9, 26 hours before Trump reported it. At the time, the news was hardly seen as alarming.
It was only when President Trump lashed out at China on social media on October 10 around 5 p.m. that the panic began. In his first message, he threatened a “massive increase” in import tariffs in retaliation for stricter Chinese export rules on rare earths. A few hours later, around 11 p.m., a second message followed in which Trump officially announced a 100 percent import tariff, effective November 1.
However, China released a statement last night clarifying that the new export controls do not amount to a total ban. Companies that comply with the rules can still obtain export permits. According to insiders, Trump’s announcement was probably intended as a negotiating tool, not as a concrete trade decision.
The response from the US
Vice President JD Vance confirmed last night that tensions between the two countries are now subsiding. He stated that the US “appreciates the friendship between Trump and Xi” and that Trump hopes he will not have to use leverage against China.
In addition, Vance emphasized that Trump is willing to be a reasonable negotiating partner. That fuels speculation that a new trade deal could be announced soon.
Market is starting to recover
The crypto market is now showing a strong recovery, as it becomes clear that the threat of a trade war between the US and China was probably based on a misunderstanding.
Bitcoin recovered quickly, rising from $111,302 to $114,000, an increase of about 2.4%. Ethereum showed an even stronger recovery with an increase from $3,825 to $4,094, good for 7.0 percent. XRP also recorded a clear recovery: the price rose from $2.37 to $2.50, an increase of about 5.5 percent.
Investors seem convinced that the announced 100% tax will probably not be introduced. The conciliatory tone from both Washington and Beijing fuels expectations that tensions will soon ease, and that markets could resume their upward trajectory once confidence is fully restored.
Source: https://newsbit.nl/cryptomarkt-herstelt-na-misverstand-tussen-vs-en-china/
