The Trade War Is on Ice, Bitcoin Enters Early Crypto Winter
Bitcoin Tumbles Towards Support. ‘Buy the Dip’ Opportunity?
On Thursday, U.S. President Donald Trump and Chinese leader Xi Jinping had a productive meeting in South Korea, which effectively puts the trade war on ice. According to President Trump, it was “an amazing meeting,” and from here on out, trade between the two countries will increase.
The crypto market initially moved lower in the absence of an official statement or press conference. However, before leaving South Korea, Trump addressed reporters aboard Air Force One. He mentioned that rare-earth issues were solved and tariffs on fentanyl-related products were slashed from 20% to 10%. Also, the U.S. will facilitate negotiations between Nvidia and China regarding the former’s access to the Chinese market. China would restart buying “tremendous amounts” of U.S. soybeans.
The President’s address made Bitcoin rebound from $107,950 to above $111,500 before falling again. However, we are yet to hear from China’s side because, at the moment, all information comes from President Trump.
December Rate Picture Becomes Blurry
Although Bitcoin started the week just above 116K, it was pressured by heavy selling and by the uncertainty generated by the Fed meeting. The interest rate was trimmed by 25 bps as it was widely anticipated, but Fed Chair Powell hinted that policymakers would become more cautious if the lack of data clouds the jobs and inflation picture.
According to reports, some FOMC members voted to hold the rates at the Wednesday meeting. The probability of another 25-bps cut in December is 68.8% at the time of writing, down from 90% before Powell’s speech, according to CME’s FedWatch tool.
Chart Analysis – BTC/USD
Lately, Bitcoin has been lacking the conviction needed to pick a direction and stick to it. After exiting the parallel channel in mid-October, it tried to return inside it, but the result was a long-wicked rejection candle.
Afterwards, the bears failed to break the support at $106,800, and a Daily candle closed inside the channel. But just as things started to look better for the bulls, the resistance at $116K sent the price hurling down amid trade war uncertainty and the Fed’s lack of commitment to another cut in December.
Even after good news from the Trump – Jinping meeting, which initially triggered a pop from $107,950 to above $111,500, Bitcoin is still bearish and looks headed towards the $106K area. A daily close above the bearish trend line seen on the chart below would bring some steam back on the bulls’ side.
The RSI is not oversold on the Daily timeframe, but it is getting very close to its 30 level on the 4H chart. On the hourly chart, it has already visited oversold and printed a bullish divergence.
