Bitcoin's Bullish Surge: The Impact of US-China Trade Talks on Cryptocurrency Markets

May 08, 2025

Bitcoin's Bullish Surge: The Impact of US-China Trade Talks on Cryptocurrency Markets

I. Executive Summary:

On May 7, 2025, Bitcoin experienced a significant upward price movement, primarily fueled by renewed optimism surrounding trade discussions between the United States and China.¹ The price of the leading cryptocurrency saw increases ranging from approximately 3.2% to 4% across various reporting platforms and exchanges, reaching levels exceeding $97,000 and briefly touching $98,000.¹ This positive price action spurred increased market activity indicative of "bullish crypto bets," including heightened trading volumes and notable activity in the options market, particularly for call options targeting the $100,000 price level.¹⁰ Alongside the trade talk developments, anticipation of the Federal Reserve's upcoming policy decision and sustained institutional investments in Bitcoin also contributed to the overall positive market sentiment.

The immediate and substantial positive correlation observed between the news of US-China trade talks and the subsequent rise in Bitcoin's price highlights the growing interconnectedness of macroeconomic and geopolitical events with the cryptocurrency market. Investors interpreted the potential for eased trade tensions as a favorable indicator for global economic stability, thereby increasing their propensity to invest in assets perceived as riskier, such as Bitcoin. This market behavior aligns with historical patterns where Bitcoin has demonstrated a positive response to news concerning the trade relationship between the United States and China. Furthermore, the emergence of "bullish crypto bets," particularly the heightened interest in call options with a $100,000 strike price, suggests a strong prevailing expectation among market participants for a continued upward trajectory in Bitcoin's price, potentially driven by positive outcomes from the anticipated trade negotiations. This speculative activity implies a belief that the current price rally is not merely a short-lived reaction but could signify the commencement of a more sustained bullish phase.

II. Introduction: Geopolitical Events and Cryptocurrency Markets:

The cryptocurrency market, with Bitcoin at its forefront, has increasingly demonstrated a sensitivity to global geopolitical and economic developments.² Bitcoin is progressively being recognized as a potential instrument for hedging against economic uncertainty and geopolitical instability.² Historically, during periods marked by tensions in the trade relationship between the US and China, Bitcoin has experienced surges in price as investors sought alternative assets.² The ongoing trade war between these two economic powerhouses has cultivated a climate of economic uncertainty that can exert influence on investor sentiment across a diverse range of asset classes, including cryptocurrencies.¹

Bitcoin's responsiveness to the US-China trade talks underscores its evolving role from a purely speculative asset to one that is becoming increasingly integrated into the broader global economic narrative. Its price fluctuations now reflect how investors perceive and react to significant international events. The market's reaction indicates a growing level of sophistication in the understanding of Bitcoin's place within the global financial system, where its value is not solely determined by internal developments within the blockchain network but is also significantly influenced by external macroeconomic factors.² The backdrop of the US-China trade war is crucial for comprehending Bitcoin's recent price action. The trade tensions have fostered an environment where investors are actively seeking assets that might offer a degree of protection against potential economic downturns or the devaluation of traditional currencies, thereby positioning Bitcoin as an appealing option for some market participants.³

III. Bitcoin's Price Rally Amid US-China Trade Talk Optimism:

On May 7, 2025, the price of Bitcoin began to climb following the announcement of forthcoming trade discussions between high-level officials from the United States and China, scheduled to take place in Switzerland.² By the morning trading session in Singapore, Bitcoin had registered an increase of approximately 3.2%, reaching a value exceeding US$97,500.² As of 9:29 AM Eastern Time, Bitcoin was trading at $96,805, marking a 3.2% rise over the preceding 24-hour period.¹ Shortly thereafter, by 9:48 AM ET, Bitcoin had further appreciated by 3.5%, reaching $97,211.0.³ Later in the day, by 9:12 PM ET, Bitcoin's price had reached approximately $98,012.⁴ Overall, Bitcoin reclaimed the $97,000 mark, experiencing a surge of nearly 4% over the course of the day.⁵ Reports indicated that Bitcoin soared beyond the $97,000 threshold following indications of progress in the trade dialogue between the two nations.⁶ Simultaneously, Bitcoin's price hit $96,500 amidst the news of resumed trade talks.⁷ Previously hovering around the $94,000 level, Bitcoin experienced a jump of nearly 3% to $97,200.⁹ The price rally was triggered by the announcement that US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer were scheduled to meet with representatives of the Chinese government.² These discussions were slated to commence on May 10 in Switzerland, although reports indicated that the talks were in their preliminary stages.¹¹

The consistent reporting of a significant price increase across numerous sources and at various times on May 7, 2025, immediately following the announcement of US-China trade talks, establishes a clear temporal link between the two events. This suggests that the market responded swiftly and favorably to the news. The near-simultaneous price surge observed across different exchanges and reporting agencies indicates a widespread market consensus that the trade discussions are a positive development for Bitcoin's price prospects. While the initial reports triggered a strong upward movement, the subsequent clarification that the talks were in the early stages ¹¹ might account for any subsequent slight declines or price stabilization noted in some reports. This underscores the market's sensitivity to the specifics of the news and the potential for adjustments in price based on the release of further information.

Timeline of Bitcoin Price Movements and Key US-China Trade Talk Developments (May 7, 2025)

Time (ET)	Bitcoin Price	Key Event/Announcement	Source(s)
Morning	> $97,500	Bitcoin rises 3.2% as US-China trade talks news emerges in Singapore.	²
9:29 AM	$96,805	Bitcoin up 3.2% over 24 hours due to US-China trade talks and Fed anticipation.	¹
9:48 AM	$97,211.0	Bitcoin rises 3.5% as trade talks in Switzerland are confirmed.	³
9:12 PM	~$98,012	Bitcoin experiences a significant rally amid positive developments in US-China relations.	⁴
Ongoing Session	~$97,000	Bitcoin reclaims $97,000 mark as trade talks buoy market sentiment.	⁵
Closing Hours	> $97,000	Bitcoin soars beyond $97K as progress in US-China trade negotiations is reported.	⁶
-	$96,500	Bitcoin reaches $96.5K following confirmation of resumed US-China trade talks.	⁷
-	$97,200	Bitcoin jumps nearly 3% to $97,200 on hopes of a trade deal.	⁹

IV. Market Sentiment and the Rise of "Bullish Crypto Bets":

The announcement of trade discussions between the US and China generated a sense of optimism regarding the potential for easing the existing trade tensions between the two economic giants.² FalconX Ltd., a digital-asset prime brokerage, reported a "renewed interest for Bitcoin topside," indicating that the market appeared to be optimistic about the possibility of positive outcomes stemming from these trade talks.¹⁰ This optimism was further reflected in the options market, where there was an increase in demand for upside exposure. Notably, trading activity was concentrated in call options with a strike price of US$100,000.¹⁰ Yuan Rong Tan, a trader at QCP Capital, characterized the prevailing market sentiment as a "broad-based risk-on" setup, which had a positive effect on cryptocurrency markets.¹⁰

The increased activity in Bitcoin call options with a $100,000 strike price indicates that a significant portion of the market is not only reacting favorably to the news of trade talks but is also actively placing bets on a substantial future increase in Bitcoin's price, signifying a strong bullish sentiment. This level of activity in the options market suggests that traders are willing to pay a premium for the potential of Bitcoin reaching the $100,000 mark, reflecting a high degree of confidence in the possibility of further price appreciation. The description of the market sentiment as "risk-on" by QCP Capital trader Yuan Rong Tan implies that investors are becoming more comfortable with embracing risk, likely due to the perceived positive implications of a potential easing of trade tensions. This broader appetite for risk tends to benefit assets like Bitcoin, which are often viewed as higher-risk but potentially higher-reward investments.

V. Factors Driving Bitcoin's Sensitivity to US-China Trade Talks:

Bitcoin's price increase following the announcement of US-China trade talks aligns with its established pattern of reacting to significant geopolitical developments.² Historically, during periods of heightened tensions in the trade relationship between the United States and China, Bitcoin has occasionally experienced price surges as investors sought alternative assets, thereby establishing its reputation as a potential hedge against geopolitical instability.² Interestingly, Bitcoin's reaction to news regarding trade differs markedly from its response to regional conflicts, suggesting a selective sensitivity to different categories of geopolitical events.² Research has indicated that in previous years, following announcements of tariff impositions by the US, the prices of both Bitcoin and Ethereum typically increased.² The current market reaction demonstrates how Bitcoin has evolved from being primarily a vehicle for capital flight from China to becoming a global asset that responds to broader international economic relations.² It is also noteworthy that fears of a protracted US-China trade war and its potential economic ramifications had previously contributed to significant price declines in Bitcoin earlier in the year.³ This recent geopolitical development may further solidify Bitcoin's role as a hedge during times of uncertainty, echoing its function during earlier phases of the trade war.¹¹

Bitcoin's historical tendency to act as a safe haven or hedge during US-China trade tensions suggests that investors have come to view it as an asset that can potentially benefit from or at least withstand periods of economic uncertainty caused by trade disputes. The current price rally is a continuation of this established market behavior. The market's past responses have likely conditioned investors to anticipate a similar reaction when news of potential de-escalation or further escalation of trade tensions emerges. Furthermore, Bitcoin's selective sensitivity to geopolitical events indicates a maturing market that is increasingly focused on events with substantial global economic consequences. The trade relationship between the US and China is a major determinant of global economic health, making it a key factor influencing Bitcoin's price. The lack of significant reaction to other, more localized conflicts suggests that the market differentiates between events with broad economic implications and those with a more limited scope.²

VI. Broader Cryptocurrency Market Response:

Ether, the second-largest cryptocurrency by market capitalization, also experienced a significant increase, rising by as much as 4.2% during the same period as Bitcoin's surge.² The broader cryptocurrency market generally saw modest gains.³ Specifically, Ether rose by 3.7%, XRP by 1.9%, Solana by 3.1%, and Cardano by 4%.³ Other reports indicated that Ethereum saw a 2% increase, and Solana gained 1.6%.⁶ However, some reports noted mixed performance among altcoins during the trade discussions, with Ethereum and XRP experiencing slight declines.⁷ On a broader scale, the altcoin market capitalization showed signs of bullish momentum by breaking out of a prolonged falling wedge pattern.¹⁷

The generally positive price movement observed across various major cryptocurrencies following the news of US-China trade talks suggests a wider market optimism and an increased appetite for risk within the digital asset space. Bitcoin's rally appears to have had a positive spillover effect on the rest of the market. This correlation indicates that market sentiment towards cryptocurrencies is often influenced by overarching macroeconomic factors rather than solely by asset-specific news. Positive developments that boost confidence in Bitcoin tend to have a favorable impact on the broader crypto market. However, the instances of mixed performance or slight declines in some altcoins ⁷ highlight that while the overall sentiment might be bullish, individual cryptocurrencies can still react differently based on their unique market dynamics and investor perceptions. This suggests that the impact of the trade talks is not uniformly distributed across the entire cryptocurrency market.

VII. Institutional Activity and Market Confidence:

Institutional investors continued to show interest in Bitcoin. Japanese firm Metaplanet acquired an additional 555 BTC, valued at approximately $53.5 million, bringing its total Bitcoin holdings to 5,555 BTC.¹ Furthermore, Strategy (formerly MicroStrategy), a prominent corporate holder of Bitcoin, announced its plans to raise $21 billion to purchase even more of the cryptocurrency.¹ However, Strategy's most recent purchase involved approximately 1,895 Bitcoin for $180 million, which was its smallest acquisition since mid-March, potentially indicating a degree of caution regarding short-term price fluctuations.³ Overall, institutional investments are seen as a factor that strengthens confidence in the market.¹ Expectations are that institutional demand will continue to rise, with Bitcoin ETFs having already recorded inflows of $1.5 billion.⁸ Bitcoin's realized capitalization also reached a record high of $890 billion, signaling strong confidence among investors.⁴

The ongoing accumulation of Bitcoin by institutional players, as evidenced by Metaplanet's increased holdings and Strategy's intentions for further purchases, reinforces the narrative of Bitcoin evolving into a more mainstream asset class gaining acceptance from larger investors. This sustained institutional interest likely plays a significant role in bolstering overall market confidence and has the potential to drive further price appreciation. Institutional investors typically undertake thorough due diligence and adopt a longer-term investment perspective, so their continued involvement suggests a belief in Bitcoin's fundamental value and its potential for future growth. However, the fact that Strategy's latest Bitcoin purchase was smaller compared to previous ones ³ indicates that even institutional investors with a generally bullish outlook on Bitcoin remain aware of the inherent market volatility and may adjust their investment strategies in response to short-term price movements or perceived levels of risk.

VIII. Alternative Factors Influencing Bitcoin's Price:

Beyond the optimism surrounding US-China trade talks, anticipation of the Federal Reserve's policy decision also played a significant role in driving Bitcoin's recent price rally.¹ While the general expectation was that interest rates would remain unchanged, any indications of a more dovish stance from the Federal Reserve could further propel Bitcoin's price upwards.¹ Bitcoin was also observed to be approaching the significant psychological resistance level of $100,000.¹ However, on-chain data suggested the presence of potential selling pressure around the $99,900 mark.¹ Looking ahead, analysts have projected that Bitcoin could potentially reach $250,000 by the end of 2025, attributing this optimistic outlook to factors such as increased adoption by institutional investors and favorable macroeconomic conditions.¹ As previously mentioned, Bitcoin's realized capitalization reached an unprecedented $890 billion, reflecting strong investor confidence.⁴ In other news, New Hampshire became the first state in the US to establish a Strategic Bitcoin Reserve, allowing for a portion of public funds to be invested in Bitcoin.¹⁵

The combination of optimism surrounding the US-China trade talks and the anticipation of the Federal Reserve's monetary policy decision created a particularly favorable environment for Bitcoin's price to surge. Positive developments in trade relations tend to reduce overall economic uncertainty, while dovish signals from the Fed could imply the continuation of low interest rates, making riskier assets like Bitcoin more attractive to investors. These two major macroeconomic factors, working in concert, likely amplified the positive market sentiment towards Bitcoin. The approach towards the $100,000 psychological resistance level ¹ suggests that the news of trade talks might have provided the necessary momentum to challenge this important barrier. However, the on-chain data indicating potential selling pressure around $99,900 ¹ highlights the technical challenges that Bitcoin might encounter in successfully breaking through this level. The longer-term projections of Bitcoin reaching $250,000 by the end of 2025 ¹ suggest that the current positive sentiment is likely part of a broader bullish outlook driven by fundamental factors such as increasing institutional adoption and supportive macroeconomic conditions, with the US-China trade talks potentially acting as a catalyst for short-term price gains.

IX. Expert Opinions and Market Analysis:

Lisa Walters, a senior analyst at CryptoQuant, believes that the positive outlook for a reduction in trade tensions between the US and China is a key factor driving the current positive market sentiment.⁶ Joe Burnett, the Director of Market Research at Unchained, holds an even more optimistic view, suggesting that Bitcoin is just beginning its ascent at the $100,000 level and predicting a potential move to $250,000 within the year and a staggering $1 million by 2030, emphasizing the improving macroeconomic conditions as a primary driver.⁵ From a technical analysis perspective, Crypto Zeinab forecasted that Bitcoin's price has the potential to break through the $100,000 resistance level, citing technical indicators and market momentum.¹³ Similarly, Rekt Capital observed that Bitcoin's price has maintained a steady position above the $93,500 mark and anticipates a possible breakout within the $97,000 to $99,000 range, potentially leading to the $100,000 milestone.¹³ Sean McNulty of FalconX Ltd. noted a "renewed interest for Bitcoin topside," expressing optimism regarding positive outcomes from the US-China trade discussions.¹⁰ Yuan Rong Tan, a trader at QCP Capital, pointed to the "broad-based risk-on sentiment" that has been fueled by the resumption of trade dialogue between the two nations.¹⁰ Furthermore, experts anticipate that the establishment of clear negotiating terms between the US and China will contribute to minimizing long-term economic uncertainty.⁶

The general consensus among various analysts and market participants is that the news of US-China trade talks has injected a significant degree of optimism into the cryptocurrency market, particularly benefiting Bitcoin. This optimism is reflected in both short-term price targets around the $100,000 level and more ambitious long-term projections. The alignment of technical analysis (predictions of breakouts), fundamental analysis (emphasis on improving macroeconomic conditions), and market sentiment analysis (increased bullish trading activity) suggests a strong underlying conviction in Bitcoin's potential for further price appreciation. However, while the immediate market reaction is positive, experts also acknowledge the underlying economic uncertainties and the fact that the trade talks are still in their early stages.⁶ This indicates a cautious optimism, where the market is hopeful for progress but remains aware that the situation is dynamic and subject to potential negative developments.

X. Conclusion and Future Outlook:

In summary, the announcement of renewed trade discussions between the United States and China on May 7, 2025, served as a significant catalyst for a notable increase in the price of Bitcoin, propelling it above the $97,000 mark. This price surge was accompanied by a rise in bullish sentiment across the market, evidenced by increased trading volumes and a focus on options contracts anticipating further price gains.

Looking ahead, the ongoing developments in the trade relationship between the US and China are likely to continue to exert influence on Bitcoin's price in the short to medium term. Positive progress towards easing trade tensions could provide further upward momentum, while any breakdown in negotiations or a renewed escalation of tensions could potentially dampen market enthusiasm.

Beyond the dynamics of the trade talks, other crucial factors will play significant roles in shaping Bitcoin's future price trajectory. These include the monetary policy decisions of the Federal Reserve, the extent of institutional adoption of Bitcoin as an asset, and the overall prevailing macroeconomic conditions.

Overall, while the immediate market reaction to the news of trade talks was bullish, investors should exercise vigilance and closely monitor both the progress of these negotiations and other pertinent market indicators to develop a comprehensive understanding of Bitcoin's potential future performance. The cryptocurrency market is known for its volatility, and despite the current optimistic sentiment, unforeseen events can still have a substantial impact on prices.