Crypto market stays fearful despite new US–China trade deal

The crypto market remains nervous even after the United States and China reached a long-awaited trade deal this week. The widely tracked Crypto Fear & Greed Index showed only a small improvement, rising from 33 to 37 on Sunday, still firmly in “Fear” territory.

Essentially, a low value of the observed sentiment index indicates that traders and investors do not trust the current breakthrough in the geopolitical sphere. A count below 50 indicates a lack of euphoria, and the increase in value reflects the growing trust of participants in the trading community.

Despite an increase in Saturday’s value, 37 is not a reassuring level. It shows that the trading community has lost confidence in the industry after the global economic superpowers’ conflict has calmed down. 

Traders are still processing the deal. US-China relations have been shaping both digital and traditional sectors for months, with tariff threats, supply chain disruptions, and tech restrictions fueling concerns about global economic growth.

This agreement has been a significant step forward, but without clarification and sanctions, investors remain cautious. Upcoming political shifts could introduce even stricter rules on intellectual property and information security, adding another layer of uncertainty.

US and China reach trade truce, but confidence stays low

The US-China deal will roll back a significant share of the tariffs imposed during the previous disputes. Washington agrees to reduce some tariffs on Chinese goods from about 57 to 47 percent.

Ultimately, Beijing agrees to restart large purchases of US agricultural goods and significantly reduce restrictions on the export of rare earths to the US markets — the materials vital for technology and energy production. 

It is therefore no surprise that the White House claimed the accord to be a massive victory for American workers, farmers, and families, and a critical stride towards restoring US economic power and national security. Chinese officials also lauded the pact as a positive step in the right direction that would bring back certainty to global commerce.

Initially, the financial markets were positive. US shares, for example, all soared, and the dollar gained momentum against all major currencies. On the contrary, significant changes were not observed in the cryptocurrency market, where it is believed that traders’ hopes have yet to materialize. 

The public has indeed considered the agreement as more of a ceasefire. Notably, various points — including tech access and commitment clauses — remain far apart or have not been addressed.  Thus, cryptocurrency market prices are projected to fluctuate, just as they did in previous rounds of negotiations.

Crypto market holds back despite improved clarity

All in all, the modest gains in the crypto industry suggest that investors are more apprehensive than optimistic. Market observers highlight the serious losses that occurred earlier in October, following Trump’s threat of 100% tariffs against China, which triggered the biggest panic in international markets. 

The event resulted in around $19 billion worth of crypto positions being liquidated in less than 24 hours. Recovery has been shaky. Analyst Michael van de Poppe of MN Capital says that the current phase is challenging, but it could, in hindsight, represent one of the market’s bottom days. He still notes that the overall momentum remains at the early stages of a potential bull cycle for both altcoins and Bitcoin.

Others echo the sentiment. More experienced traders stated that the deal is the perfect prerequisite for a slow recovery and is “bullish for markets in the medium term.” In other words, the majority is under the impression that while traders should remain hopeful, they should not expect bull activity anytime soon. For now, fear and hope are equally responsible for determining prices. Traders are likely awaiting the signs that the trade war is indeed over, and global markets will be alright long enough for the market to recover.

Sign up to Bybit and start trading with $30,050 in welcome gifts