The US-China tariff conflict, a major source of market anxiety throughout October, was resolved. Despite this positive development, Bitcoin failed to rally last week, posting a 1.72% weekly decline.

The crypto market’s failure to respond to clear positive news signals a profound weakening of its upward momentum. Ethereum fell 2.55% for the week, while Solana (SOL ($176.56)) also declined 4.76% over the same period.

Geopolitical Gains vs. Crypto Slump

The crucial period for crypto investors was between October 29 and 30. This timeframe encompassed the Federal Reserve meeting and the high-stakes summit between US President Donald Trump and Chinese President Xi Jinping.

China acquiesced to three significant US demands, including a one-year delay on rare earth export restrictions and the resumption of US soybean imports. As a result, the US-China summit yielded considerable clarity. In exchange, the US agreed to reduce the overall tariff rate on China from 57% to 47%. The leaders also agreed to reciprocal visits next year.

The resolution was immediately reflected in traditional safe-haven assets. For example, the price of gold, which had surged after the tariff conflict escalated on October 10, retreated to its pre-escalation level of approximately $3,990 per ounce by the weekend.

The Nasdaq 100 Index, a key risk-asset proxy, rose approximately 2.7% from its October 10 low. The dissolved geopolitical risk and strong corporate earnings buoyed this gain.

Yet, Bitcoin’s price has struggled significantly. As of Sunday evening UTC, Bitcoin traded near $110,000, a 9.4% drop from its price on October 10.

On-chain analysts attribute Bitcoin’s weak trajectory to the loss of momentum triggered by the October 10 crash. This event saw approximately $19 billion in leverage liquidated from the derivatives market, depleting the primary fuel for the recent rally.

Powell’s Warning Overrides Trade Truce

The other significant event was the Federal Reserve’s rate announcement on October 29. The Fed’s FOMC lowered the benchmark interest rate by 0.25 percentage points and announced the termination of Quantitative Tightening (QT) effective December 1—fundamentally positive news for risk assets.

However, Chairman Jerome Powell injected new uncertainty by suggesting the Fed might not implement a rate cut in the December FOMC meeting. This was the first time Powell had offered such a concrete opinion on the next month’s decision.

Before the FOMC, the CME FedWatch tool showed a 91.5% probability of a December rate cut. Powell’s comments caused this probability to plunge to 55%, triggering an immediate 2% drop in Bitcoin’s price. Though the FedWatch probability has since recovered to 70.4% as of Sunday, the outlook remains highly ambiguous.

Fed Officials Back Powell; New Uncertainty Looms

Multiple Fed officials have since publicly supported Powell’s stance. Atlanta Fed President Raphael Bostic stated that Powell’s message accurately conveyed the diverse views within the Fed and expressed appreciation for the Chairman’s willingness to signal a potential rate hold in December.

In summary, while the US-China summit successfully reduced the geopolitical uncertainty of October, the Fed has introduced a new layer of ambiguity regarding the future of monetary easing.

Consequently, macroeconomic indicators like inflation and employment data will regain significant influence this week. The Altcoin Season Index, a proxy for crypto market uncertainty, hit 41 on Sunday, its lowest level since the second week of August.

The Week Ahead: A Slew of Macro Data

A heavy schedule of employment data releases will dominate the week: the JOLTs Job Openings and Labor Turnover Survey is due Tuesday, ADP Nonfarm Employment on Wednesday, Unemployment Claims on Thursday, and the Michigan Inflation Expectations Index on Friday. Stronger-than-expected jobs data will increase the probability of a December rate hold.

Public statements from various Fed officials, including Governor Lisa D. Cook (Monday), Vice Chair Michelle W. Bowman (Tuesday), and Governors Michael S. Barr and Christopher J. Waller (Thursday), are also anticipated to move the market.

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