- Bitcoin surged 10% from US$100k to US$110k following optimism about US-China tariff negotiations, though has since retreated 2%.
- Analysts describe Trump’s claimed rare earths deal as merely a “handshake agreement” with crucial details yet to be determined.
- Experts warn that comprehensive trade agreements typically take years to finalise, with trust between Xi and Trump still questionable.
- Trump called for Fed rate cuts citing lower CPI data, though economists remain sceptical about drawing conclusions from early tariff effects.
The week started well for crypto markets, as hopes were high that the US and China could strike a deal on tariff disputes. However, after Trump declared the rare-earths deal “done”, markets barely budged – a clear sign that investors doubt its substantive impact.
After a local low of around US$100k (AU$153.8k) per Bitcoin seven days ago, the price of the coin went as high as US$110k (AU$169.2k), an increase of 10 per cent. Since then, the price has fallen by around 2 per cent, with most major cryptocurrencies following Bitcoin’s path.
Analyst Calls Deal a “Handshake Agreement”
Whether the US-China deal is as good as the Trump administration would like us to believe remains to be seen. According to Reuters, Ray Attrill, Head of FX Strategy at NAB, warned that “the devil is going to be in the details of what is, as I say, no more than a handshake agreement”, adding that it’s far too soon to tell if a “cast iron” new deal has been brokered.
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He also said it remains to be seen if trust between Xi and Trump can be restored, which had “clearly been broken since the Geneva Agreement was published”.
The New York Times said in a recent article that the proposed deal is merely undoing some of the damages Trump’s tariff war caused in the first place, and that it “had raised questions about what exactly had been gained” by Trump’s tariff war.
Carol Kong, Currency Strategist at the Commonwealth Bank of Australia said that while details about the deal remain scarce, markets would be happy with any progress and that it’s a good thing that “the two sides are talking”.
Though she warned tensions would likely escalate again as it takes time to hammer out a solid agreement:
It will still be very hard and it will take a long time for both sides to reach a comprehensive trade agreement. That sort of comprehensive deal usually takes years to be reached, so I’m skeptical that a framework reached at the meeting in London will be comprehensive.
Carol Kong, Currency Strategist at the Commonwealth Bank of AustraliaRates Should Come Down, Says Trump
Meanwhile, Trump boasted that latest CPI data has increased less than expected and that the US Fed should lower rates now. Though Michael Pugliese, senior economist at Wells Fargo told CNN that while a good sign, it wasn’t clear whether this had anything to do with tariffs.
I think it’s too early to draw any conclusions from whether the tariffs are having ‘X’ effect or ‘Y’ effect.
Michael Pugliese, senior economist at Wells FargoAnalysts at the Kobeissi Letter pointed out that looking only at CPI data is flawed as real prices are up, continuing to hurt American wallets.
They also said that while inflation is slowing, prices remain high and “will not be coming down, simply the rate of change in the increase in prices is falling”.
Going forward, all eyes will be on how the US–China dispute evolves and whether the Fed holds rates steady – and the Musk–Trump kerfuffle also has the potential to unsettle markets further in the coming days and weeks.
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