Emre Yumlu 
After weeks of heightened volatility and steep declines, the cryptocurrency market is showing signs of recovery, buoyed by optimism surrounding a potential trade agreement between the United States and China. Bitcoin surged above $116,400 early in the week — its highest level in two weeks — signaling a renewed sense of confidence among investors.
Trade Talks Boost Bitcoin and Market Sentiment
Following a record $19 billion liquidation event that triggered widespread panic, reports of a temporary tariff truce between Washington and Beijing have helped calm investor nerves. Market sentiment has shifted from “fear” to “neutral,” according to recent indicators, as hopes of de-escalation improve risk appetite across global markets.
A crucial meeting between US President Donald Trump and Chinese President Xi Jinping is scheduled for Thursday, where both sides are expected to discuss a new framework aimed at preventing further trade tensions. Industry experts believe the outcome of the meeting could set the tone for both traditional and digital asset markets in the weeks ahead.
Wenny Cai, co-founder and COO of SynFutures, commented that the latest progress in US-China trade talks had “ignited a weekend rally in Bitcoin,” adding that optimism around the negotiations “has lifted overall risk sentiment.”
Trump Signals Confidence in Reaching a Deal
In remarks made aboard Air Force One on Monday, President Trump said he believed both nations would “come away with the deal,” fueling optimism across markets. Following his statement, Bitcoin reclaimed the short-term holder (STH) cost basis at approximately $114,000 — a key level for sustaining short-term momentum.
Analysts note that holding above this threshold is crucial for Bitcoin’s stability, as dips below it tend to trigger increased selling pressure from short-term investors. The recovery above this point suggests improving resilience in the market despite recent shocks.
Markets Eye the Upcoming Fed Decision
Attention is now turning to Wednesday’s Federal Open Market Committee (FOMC) interest rate decision, another major catalyst for risk assets. According to the CME Group’s FedWatch tool, markets are pricing in a 96.7% probability of a 25-basis-point rate cut by the Federal Reserve.
Expectations of lower borrowing costs are fueling demand for risk-on assets, including cryptocurrencies. Many investors anticipate that a combination of monetary easing and easing trade tensions could pave the way for a broader market recovery.
A Renewed Sense of Stability for Bitcoin
Earlier this month, Trump’s announcement of a potential 100% tariff on Chinese imports — set to take effect on November 1 — triggered a sharp sell-off, sending Bitcoin briefly below $105,000. However, recent signs of diplomatic progress and dovish monetary expectations have helped stabilize market conditions.
Bitcoin’s ability to reclaim key technical levels amid improving macroeconomic sentiment highlights the asset’s growing maturity. If Thursday’s talks result in a concrete agreement, analysts believe Bitcoin could extend its rebound and strengthen its position as a global hedge against economic uncertainty.
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