On a seemingly calm afternoon, alarms suddenly rang out in the global financial markets without any warning. In the absence of any direct bad news, stock indices across Asia, from Hong Kong to Shanghai, suddenly turned downwards, with the intensity and speed of the sell-off appearing both fierce and bizarre. Panic quickly spread through the market as investors rushed to inform each other, trying to find the "butterfly" that stirred the storm. Ultimately, all eyes were focused on a distant place—the intense U.S.-China trade negotiations table. On traders' screens and in private chat groups, a concise yet brutal saying began to circulate: "London has fallen."
This statement is not a reference to a city in the physical sense, but a metaphor for the fact that the crucial negotiations in London have fallen from the dawn of hope to the abyss of disappointment. Around the same time, Yuyuan Tan Tian, one of China's most important official voices, published a strongly-worded article emphasizing that "China is sincere, but at the same time principled." Reuters further added that the US side was "surprised" by the tough stance of the Chinese delegation in the negotiations. This sudden market shock, like a prism, clearly reflects how closely global risk assets, including cryptocurrencies, which were once regarded as "escaps", and the great power game have become very close.
In the world of digital assets, many once firmly believed that it could build a parallel financial universe independent of traditional geopolitical influences. However, when the panic of the A-shares can instantly transmit to the Bitcoin candlestick chart, we must re-examine this seemingly beautiful vision. Today, understanding every glance and chip on the China-US negotiation table is no longer the exclusive domain of diplomats and economists; it is becoming a required course for every cryptocurrency investor.
From "Cloud" to "Mortal World": The Awakening of the Macroscopic Attributes of Cryptographic Assets
To understand why this negotiation can have such a direct impact on the cryptocurrency market, it is first necessary to clarify a fundamental shift: cryptocurrency assets, led by Bitcoin, have completed their transformation from "geek toys" to "global macro risk assets."
In the early days, the participants in the cryptocurrency market were primarily tech enthusiasts and retail investors, with price fluctuations being driven more by endogenous factors such as technological breakthroughs, community consensus, and project trends. Its correlation with traditional financial markets is extremely low, often moving independently even when the latter is volatile, which is why it has been dubbed "digital gold" and is considered to have hedging properties.
However, with the recent influx of institutional investors such as Wall Street giants, hedge funds, and publicly listed companies, crypto assets are increasingly being incorporated into the grand framework of global asset allocation. These "smart money" players, who hold massive amounts of capital, are accustomed to using a mature set of macroeconomic logic to evaluate and trade assets. In their models, cryptocurrencies are classified as high-risk, high-beta growth assets, whose risk-return characteristics are highly similar to those of technology stock sectors like the Nasdaq 100 index.
This shift in identity means that the crypto market has completely bid farewell to the pastoral era of "self-sufficiency," and its pulse begins to resonate in sync with the global "risk appetite." When relations between China and the U.S. are tense and the global trade outlook is uncertain, institutional investors will initiate a "risk-off" mode, withdrawing funds from all high-risk assets and turning to traditional safe havens like the U.S. dollar and U.S. Treasury bonds. In this process, cryptocurrencies and the stock market, especially tech stocks, often face simultaneous sell-offs, forming a strong correlation of "same rise and same fall." The plunge of A-shares and Hong Kong stocks in the afternoon is a vivid interpretation of this mechanism.
The "Two-Sided Rashomon" at the negotiation table
Having understood the linkage between crypto assets and macro risks, let's zoom in and focus on the negotiation itself. Interestingly, before the market sentiment took a sharp downturn, the negotiation had once released positive signals.
After the first day of the second round of negotiations, U.S. officials appeared quite optimistic. The Secretary of the Treasury claimed that "the talks went well," and the Secretary of Commerce stated that "there were results." Then-President Trump even declared that "everything received is good news." These statements once stimulated market sentiment, leading people to be full of expectations for reaching an agreement. However, throughout the entire process, the Chinese side maintained its usual caution and silence, not expressing any views on the talks.
This temperature difference of "hot in the United States and cold in the middle" is itself part of the complex public opinion warfare and psychological warfare in the great power game. The US is trying to steer market expectations through positive public statements, create a more favorable atmosphere for itself to negotiate, and demonstrate its ability to "broker deals" at home. China's silence is a manifestation of its strategic determination to avoid exposing its cards prematurely, insisting on "results-oriented" and refraining from making any meaningless statements before the final agreement is reached.
The final market crash occurred after strong signals were released from official channels such as "Yuyuantan Tian". This indicates that what truly determines the direction of the market is not the optimistic smokescreens released during the negotiation process, but rather the substantial differences that touch on the core interests of both parties. Investors shifted instantly from initial optimistic expectations to concerns that negotiations could stall or even break down, triggering panic-driven "risk aversion" actions.
Core chips and the sandbox simulation of future trends
Through the fog of public opinion, we see the clear demands and core bargaining chips from both sides. As White House National Economic Council Director Hassett stated, the core exchange of this negotiation is that "U.S. export controls will be relaxed, and China will also release rare earths." Behind this are the respective economic "pain points" for both sides.
For the United States, its high-tech industry has a high dependence on China's rare earth supply chain. At the same time, against the backdrop of stalled trade negotiations with other countries, there is an urgent need for a significant diplomatic victory to boost morale. For China, facing economic pressures such as internal CPI contraction and slowing exports, it indeed requires a relaxation of the external business environment, especially the lifting of restrictions on the import of key technologies and equipment, to inject new vitality into the economy.
Both parties have the motivation to reach an agreement, but the difference lies in the intensity of "relaxation" and "reduction." This is exactly the difficulty of the negotiation. Based on this, we can conduct a sandbox simulation of the future trends in the crypto market:
Scenario 1: A major breakthrough (big positive) If the two sides can finally reach a substantial agreement on core export controls and rare earth supplies, which exceeds market expectations, accompanied by significant tariff cuts. This will greatly boost risk appetite in global markets, triggering a strong "risk-on" rally. In this scenario, the US dollar is likely to weaken, while stocks, commodities and cryptocurrencies will see a general rally. For the crypto market, this means not only an influx of short-term liquidity, but also the possibility of starting a medium-term uptrend driven by an improving macro environment.
Scenario 2: Stalemate and small compromise (neutral and bearish) If the negotiations only reach some painless results, or choose to postpone the talks, the two sides will not make concessions to each other on the core issues. This will allow uncertainty to continue to loom over the market. Risk assets may see a brief "boot on the ground" rally, but the rally will be unsustainable due to the lack of substantial tailwinds. There is a high probability that the crypto market will fall into a "garbage time" of wide fluctuations, and the price trend will be more affected by other macro data (such as inflation, employment) and endogenous news in the industry, and the direction is unclear.
Scenario 3: Negotiation breakdown (major downside) This is the last thing the market wants to see. Once the negotiations break down completely, or even trigger a new round of mutual sanctions, the world will fall into a deep "risk aversion" mode. Safe-haven funds will rush into the dollar, causing the dollar index to soar and have a "pumping effect" on all non-US assets. At that time, the crypto market will face a deep correction synchronized with the global stock market, which is drastic and can last for weeks or even months.
The Return of the Endgame: When the Dust Settles, Monetary Policy is the "True Path"
Regardless of the outcome of the game between China and the United States, we need to recognize that this is ultimately a variable affecting the short-term fluctuations in the market. As mentioned in the material, once the dust settles on these geopolitical games, the main theme of the market will eventually return to global monetary policy. This is the core driving force that determines the long-term value of crypto assets.
Cryptocurrency, especially Bitcoin, has its fundamental value narrative as a tool to hedge against the credit inflation and purchasing power dilution of the global fiat currency system. Its enemies are never a specific country or trade policy, but rather the unconstrained printing press. Therefore, the Federal Reserve's interest rate decisions, the balance sheet sizes of global central banks, and the fiscal deficit levels of various countries are the fundamental factors that will determine whether crypto assets can grow into trillion-dollar mainstream assets over the next decade.
As the fog of local geopolitics clears, investors will find that the truly important issues remain: Is global debt sustainable? Will inflation return? Will major central banks restart a new round of quantitative easing to address the next economic downturn? The answers to these questions will provide the strongest support for the long-term value of crypto assets.
Therefore, for a mature cryptocurrency investor, the correct strategy is to remain clear-headed amidst the macroeconomic turmoil. On one hand, it is crucial to closely monitor significant geopolitical events such as Sino-U.S. negotiations, treating them as important indicators for assessing short-term market sentiment and liquidity, in order to adjust positions and avoid extreme risks. On the other hand, it is even more important to look beyond short-term price fluctuations and establish one's investment beliefs based on long-term judgments about the evolution of the global monetary system and the development of cryptocurrency technology itself.
Every word and action at the negotiating table can certainly make the market experience joy and sorrow overnight, but what truly determines the future of this new digital frontier are the more grand and profound structural changes of the era. Understanding this, we can maintain our resolve amid the noise, navigate through the fog, and ultimately reach the other shore.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
London has fallen, negotiations are urgent: The China-U.S. game sparks the encryption "clearing moment".
Written by: Luke, Mars Finance
On a seemingly calm afternoon, alarms suddenly rang out in the global financial markets without any warning. In the absence of any direct bad news, stock indices across Asia, from Hong Kong to Shanghai, suddenly turned downwards, with the intensity and speed of the sell-off appearing both fierce and bizarre. Panic quickly spread through the market as investors rushed to inform each other, trying to find the "butterfly" that stirred the storm. Ultimately, all eyes were focused on a distant place—the intense U.S.-China trade negotiations table. On traders' screens and in private chat groups, a concise yet brutal saying began to circulate: "London has fallen."
This statement is not a reference to a city in the physical sense, but a metaphor for the fact that the crucial negotiations in London have fallen from the dawn of hope to the abyss of disappointment. Around the same time, Yuyuan Tan Tian, one of China's most important official voices, published a strongly-worded article emphasizing that "China is sincere, but at the same time principled." Reuters further added that the US side was "surprised" by the tough stance of the Chinese delegation in the negotiations. This sudden market shock, like a prism, clearly reflects how closely global risk assets, including cryptocurrencies, which were once regarded as "escaps", and the great power game have become very close.
In the world of digital assets, many once firmly believed that it could build a parallel financial universe independent of traditional geopolitical influences. However, when the panic of the A-shares can instantly transmit to the Bitcoin candlestick chart, we must re-examine this seemingly beautiful vision. Today, understanding every glance and chip on the China-US negotiation table is no longer the exclusive domain of diplomats and economists; it is becoming a required course for every cryptocurrency investor.
From "Cloud" to "Mortal World": The Awakening of the Macroscopic Attributes of Cryptographic Assets
To understand why this negotiation can have such a direct impact on the cryptocurrency market, it is first necessary to clarify a fundamental shift: cryptocurrency assets, led by Bitcoin, have completed their transformation from "geek toys" to "global macro risk assets."
In the early days, the participants in the cryptocurrency market were primarily tech enthusiasts and retail investors, with price fluctuations being driven more by endogenous factors such as technological breakthroughs, community consensus, and project trends. Its correlation with traditional financial markets is extremely low, often moving independently even when the latter is volatile, which is why it has been dubbed "digital gold" and is considered to have hedging properties.
However, with the recent influx of institutional investors such as Wall Street giants, hedge funds, and publicly listed companies, crypto assets are increasingly being incorporated into the grand framework of global asset allocation. These "smart money" players, who hold massive amounts of capital, are accustomed to using a mature set of macroeconomic logic to evaluate and trade assets. In their models, cryptocurrencies are classified as high-risk, high-beta growth assets, whose risk-return characteristics are highly similar to those of technology stock sectors like the Nasdaq 100 index.
This shift in identity means that the crypto market has completely bid farewell to the pastoral era of "self-sufficiency," and its pulse begins to resonate in sync with the global "risk appetite." When relations between China and the U.S. are tense and the global trade outlook is uncertain, institutional investors will initiate a "risk-off" mode, withdrawing funds from all high-risk assets and turning to traditional safe havens like the U.S. dollar and U.S. Treasury bonds. In this process, cryptocurrencies and the stock market, especially tech stocks, often face simultaneous sell-offs, forming a strong correlation of "same rise and same fall." The plunge of A-shares and Hong Kong stocks in the afternoon is a vivid interpretation of this mechanism.
The "Two-Sided Rashomon" at the negotiation table
Having understood the linkage between crypto assets and macro risks, let's zoom in and focus on the negotiation itself. Interestingly, before the market sentiment took a sharp downturn, the negotiation had once released positive signals.
After the first day of the second round of negotiations, U.S. officials appeared quite optimistic. The Secretary of the Treasury claimed that "the talks went well," and the Secretary of Commerce stated that "there were results." Then-President Trump even declared that "everything received is good news." These statements once stimulated market sentiment, leading people to be full of expectations for reaching an agreement. However, throughout the entire process, the Chinese side maintained its usual caution and silence, not expressing any views on the talks.
This temperature difference of "hot in the United States and cold in the middle" is itself part of the complex public opinion warfare and psychological warfare in the great power game. The US is trying to steer market expectations through positive public statements, create a more favorable atmosphere for itself to negotiate, and demonstrate its ability to "broker deals" at home. China's silence is a manifestation of its strategic determination to avoid exposing its cards prematurely, insisting on "results-oriented" and refraining from making any meaningless statements before the final agreement is reached.
The final market crash occurred after strong signals were released from official channels such as "Yuyuantan Tian". This indicates that what truly determines the direction of the market is not the optimistic smokescreens released during the negotiation process, but rather the substantial differences that touch on the core interests of both parties. Investors shifted instantly from initial optimistic expectations to concerns that negotiations could stall or even break down, triggering panic-driven "risk aversion" actions.
Core chips and the sandbox simulation of future trends
Through the fog of public opinion, we see the clear demands and core bargaining chips from both sides. As White House National Economic Council Director Hassett stated, the core exchange of this negotiation is that "U.S. export controls will be relaxed, and China will also release rare earths." Behind this are the respective economic "pain points" for both sides.
For the United States, its high-tech industry has a high dependence on China's rare earth supply chain. At the same time, against the backdrop of stalled trade negotiations with other countries, there is an urgent need for a significant diplomatic victory to boost morale. For China, facing economic pressures such as internal CPI contraction and slowing exports, it indeed requires a relaxation of the external business environment, especially the lifting of restrictions on the import of key technologies and equipment, to inject new vitality into the economy.
Both parties have the motivation to reach an agreement, but the difference lies in the intensity of "relaxation" and "reduction." This is exactly the difficulty of the negotiation. Based on this, we can conduct a sandbox simulation of the future trends in the crypto market:
Scenario 1: A major breakthrough (big positive) If the two sides can finally reach a substantial agreement on core export controls and rare earth supplies, which exceeds market expectations, accompanied by significant tariff cuts. This will greatly boost risk appetite in global markets, triggering a strong "risk-on" rally. In this scenario, the US dollar is likely to weaken, while stocks, commodities and cryptocurrencies will see a general rally. For the crypto market, this means not only an influx of short-term liquidity, but also the possibility of starting a medium-term uptrend driven by an improving macro environment.
Scenario 2: Stalemate and small compromise (neutral and bearish) If the negotiations only reach some painless results, or choose to postpone the talks, the two sides will not make concessions to each other on the core issues. This will allow uncertainty to continue to loom over the market. Risk assets may see a brief "boot on the ground" rally, but the rally will be unsustainable due to the lack of substantial tailwinds. There is a high probability that the crypto market will fall into a "garbage time" of wide fluctuations, and the price trend will be more affected by other macro data (such as inflation, employment) and endogenous news in the industry, and the direction is unclear.
Scenario 3: Negotiation breakdown (major downside) This is the last thing the market wants to see. Once the negotiations break down completely, or even trigger a new round of mutual sanctions, the world will fall into a deep "risk aversion" mode. Safe-haven funds will rush into the dollar, causing the dollar index to soar and have a "pumping effect" on all non-US assets. At that time, the crypto market will face a deep correction synchronized with the global stock market, which is drastic and can last for weeks or even months.
The Return of the Endgame: When the Dust Settles, Monetary Policy is the "True Path"
Regardless of the outcome of the game between China and the United States, we need to recognize that this is ultimately a variable affecting the short-term fluctuations in the market. As mentioned in the material, once the dust settles on these geopolitical games, the main theme of the market will eventually return to global monetary policy. This is the core driving force that determines the long-term value of crypto assets.
Cryptocurrency, especially Bitcoin, has its fundamental value narrative as a tool to hedge against the credit inflation and purchasing power dilution of the global fiat currency system. Its enemies are never a specific country or trade policy, but rather the unconstrained printing press. Therefore, the Federal Reserve's interest rate decisions, the balance sheet sizes of global central banks, and the fiscal deficit levels of various countries are the fundamental factors that will determine whether crypto assets can grow into trillion-dollar mainstream assets over the next decade.
As the fog of local geopolitics clears, investors will find that the truly important issues remain: Is global debt sustainable? Will inflation return? Will major central banks restart a new round of quantitative easing to address the next economic downturn? The answers to these questions will provide the strongest support for the long-term value of crypto assets.
Therefore, for a mature cryptocurrency investor, the correct strategy is to remain clear-headed amidst the macroeconomic turmoil. On one hand, it is crucial to closely monitor significant geopolitical events such as Sino-U.S. negotiations, treating them as important indicators for assessing short-term market sentiment and liquidity, in order to adjust positions and avoid extreme risks. On the other hand, it is even more important to look beyond short-term price fluctuations and establish one's investment beliefs based on long-term judgments about the evolution of the global monetary system and the development of cryptocurrency technology itself.
Every word and action at the negotiating table can certainly make the market experience joy and sorrow overnight, but what truly determines the future of this new digital frontier are the more grand and profound structural changes of the era. Understanding this, we can maintain our resolve amid the noise, navigate through the fog, and ultimately reach the other shore.