How The US-China Trade Truce Affects Crypto

So recently, the United States and China called a truce to their tariff wars, and this has brought in much-needed relief to the markets. However, what most people do not know is that this reaction is a bit premature, and it's not likely to last. In fact, a lot of people are going to be reading into this move wrongly. So in this video, I'm going to break down exactly how these tariffs, or rather this truce, is going to affect crypto as well as your other traditional risk-on assets like your NASDAQ, you know, the futures equities, your tech stocks, stocks in general. And most importantly, I'm going to give you guys the game plan on how to take advantage of this in a time when there is a lot of uncertainty, both in the short term, meaning 1 to 3 months, as well as in the medium term, which is, let's say, 3 to 12 months. And this is going to be a little bit of a comprehensive video, so buckle in and yeah, let's dive right into it. So to kick things off, why does Trade Truths matter more than you think, right? A lot of crypto traders, we are looking at, you know, all the degen, you know, WIF, PopCat, and all this stuff, and we tend to treat macro news as just unwanted background noise. That's a mistake, especially now. This recent 90-day tariff rollback deal between the US and China isn't just kind of like a slideshow, right? This is going to affect so many things in crypto. Now, on the surface, this truce that they've called looks like a positive, right? Now there is much less tension between US and China. There are, of course, lower tariffs, which has broad economic implications, good implications, and currently the markets are going up. But dig deeper and you'll see what actually happened is that the The market was expecting a scenario that was much worse, and then the reality is that they got a scenario that was much better, way better than expected. And so that's why the markets kind of bounced the way it did. And so this brings me on to another point, right? This is not a fundamental macro bullish catalyst. This is more of like a short-term, you know, kind of relief masquerading as renewed optimism. So what actually happened, like, just to give you a breakdown of this 90-day truce, it is a reversal, right? It is not a removal. Essentially, Previous US tariffs from China went from 145% down to 30%, and previous tariffs from China went from 125% down to 10%. This is not a removal, right? This was April levels, basically levels that were set a month ago. That's why when I tell you that this is not a fundamentally, you know, macro bullish catalyst, this is what I mean, right? It's quite literally you are back where you started, and back where you started was the start of this, you know, trade war and tariff war. And so that's still not a good place to be in because one thing you need to understand is that 30% tariffs is still historically Huge. So essentially, this deal is just a ceasefire, right? Nothing has changed. And a couple of big problems with this ceasefire is that there is no deliverables. Essentially, yeah, we just call a truce, but we have no idea what's going to happen next. And this is going to be the thing that we need to be careful of the most. And also one of the reasons why all of this is news and the current, you know, optimism that you see in the markets could flip just like that. And another thing is that this is, of course, limited to a 90-day window where they can maybe come to an agreement or they can maybe fix this whole situation. Essentially, Again, coming back to what the markets did, it simply reacted to the worst-case scenario not happening, which again is going to be pretty short-lived. It's going to be one of the core kind of like themes that we're going to be discussing throughout this video. So now let's talk about what this actually means for the US economy. Essentially, this temporary truce is just something that provides them with some breathing room. Again, this is not a cure like what I've mentioned before. It provides relief for the importers, you know, the retailers, the manufacturers. There is, of course, a lot of relief in the fact that Previously, everybody was afraid that these tariffs were going to drive inflation completely out of control. Currently, that is— well, you have temporary relief and you basically avoid it kind of like a worst-case recession shock. But the problem is that this is because of the temporary nature of this deal and how all of this can change with the flip of a finger. This is just very much temporary and you should expect things to change just like that. And for China, it is also just a temporary lifeline. And lifeline is kind of the right word here because if you take a look at the situation in China, something that I've been following actually over the last, you know, couple of weeks is the situation on the ground. Now, perhaps the videos completely overblow the situation on the ground, but as it stands right now, there are a lot of, you know, factories going bankrupt. There are a lot of people getting laid off. There is— China's kind of going into deflation where nobody's spending because of how uncertain they feel about the whole economic situation. So prices are actually going down for them because, you know, they need to encourage people to spend. And deflation is arguably— well, not arguably, I think deflation is much worse than inflation because now you have Quite literally, an economic kind of stagnation in China. That aside, there are also a lot of deals in terms of you know big investment deals into you know opening new factories and whatever. All of that has stopped. A lot of companies actually, a lot of factories are having their long-term deals being you know cut due to all of this uncertainty. And as it stands, this is just a temporary lifeline. I don't think it's going to change much, and this will help the exporters in China actually survive. But unless again a comprehensive deal comes into place after three months, it's still going to be looking quite grim for China. But enough about that. I don't think you guys are here for China. So let's talk about crypto. And yes, crypto did give a really strong rally. But again, geopolitical tension is still very much alive, and this can blow up at any single point. Let's study a little bit about how the markets actually reacted and why it matters. First of all, to understand this is a narrative repricing. A lot of people were way too bearish back in April, and Obviously, now that this news comes out, boom, right? This kind of just a market repricing into you know a different sentiment. Essentially, across the Nasdaq, the S&P, the Dow Jones, and the semiconductor industry, especially all the industries that are related to or heavily dependent on Chinese inner trade, all of those have been rallying, and crypto this time around has also rallied. Which brings me on to a very important point: currently, Bitcoin is behaving kind of like a digital Nasdaq, and in the past, Bitcoin tended to be you know treated as kind of like a hedge against uncertain market conditions. This time around, it's a little bit different. Different where Bitcoin's been traded as a beta, essentially something that is, you know, high risk potentially give you really high reward, especially as a first mover. So in this case, you should definitely look at crypto kind of as a NASDAQ where it's a risk-on asset. For those of us who've been in crypto, we kind of know this already, but I digress. Now besides seeing all of the risk-on assets, you know, pumping straight up, we've also seen gold, you know, finally stop the insane rally that it's been having. Bonds have went down, the dollar index has been going up, and essentially this is a classic rotation pattern where people are moving out of safety and going into risk-on. But here's a potential problem that could arise in the future. If the DXY is going up as well as rising bond yields, then this could be a potential, you know, headwind because crypto is ultimately valued against the USD. It only makes sense that if the USD goes up, crypto kind of goes down, right? It's a very oversimplified explanation of it, but this is just a potential concern to watch for moving forward. And so here, just to give you an idea of what really happened, market feared these tariffs. They got a much better situation, and that's why you're rallying, which also means that this is potentially very short-lived. Currently, there are a couple of narratives that are sort of fighting to see who can stay, get into and stay in the limelight, which is the bullish and bearish scenario, right? Bearish is that this is absolutely just temporary, which is kind of like what we talked about in this presentation. But then you also have the bullish side, which is, you know, hey, things are actually gonna become much better. They have faith, they have confidence. The problem that most people are kind of running into is that they're kind of picking sides here. And that's not our job as traders. It's simply to read how the trend is kind of shaping up. For example, sure, this 90-day truce is long-term bearish, right? In any timeframe beyond this 90-day period, it is bearish. But within this 90-day period, it is bullish. And so our job as traders is to actually ride the bullish wave while it's there and get out before the bearish wave kind of hits, or at least reposition into shorts. I'm going to talk about that short to medium-term kind of outlook as well as the game plan later on in much more detail. But the last thing we need to talk about before we get into that is the Federal Reserve. It is always paramount for us as traders to take a look, or rather, really stay close to what the Federal Reserve is thinking about doing to the markets because ultimately they are the ones that turn the on switch or the off switch on, you know, rising prices. If they start raising interest rates, guess what? Everything's gonna crash. It's just how it is. Look back at every major, you know, bull market in the world and the Federal Reserve, as well as interest rates, as well as monetary policies, definitely had a lot to do with it. And so this entire time, the Fed was put in kind of like a really tough situation where because these tariffs were going up, it means that inflation is gonna go up. And the job of the Federal Reserve is to actually keep to introduce inflation where it's necessary and to cut back on inflation when they feel like it's going to get to too much. Currently, everyone is feeling the burn from, you know, all of these COVID policies where inflation's absolutely running rampant. Or rather, inflation was running rampant back in 2021 to 2022, but you are feeling the effects now. And if inflation continues to rise, the Fed will have no choice but to raise interest rates, which is absolutely terrible. Like, it's the worst thing that can happen for the market. This truce kind of buys time for the Fed to not do that. They can now adopt more of a wait-and-see approach and like, okay, let's see how things develop. Does inflation go down from here because of this truce? Will there be a comprehensive deal struck by Trump and his team as well as China? And if that is the case, then they absolutely do not need to raise interest rates. In fact, they might also, depending on what kind of deal gets finalized later on down in August, they could even start reducing interest rates. But we're going to talk about that scenario in just a bit. Essentially, implications is that the fact that The Federal Reserve is currently going to be sitting on the sidelines is a bullish liquidity window. Again, within this 90-day period, there is definitely a lot of opportunity to be had in terms of the bullish side of things, with the only concerns being the US dollar index as well as rising bond yields. And then now let's get into the scenarios that I was talking about. First of all, let's kick things off with short-term scenarios. First of all, for crypto, I think that bullish momentum likely holds. Bitcoin could test the all-time high very, very soon, and alts will continue to outperform. Now specifically, the ones that have been doing the best are, you know, your traditional meme coins, right? You have Pengu, Pepe, Bomi, Wave, Popcat, and all of this stuff, as well as, you know, just high-quality layer 1 projects. SUI comes to mind right off the get-go. It's been an outlier over the last few months. And so whatever coins— like, here's the simple, you know, foolproof guide to making sure that you actually make money during this period is to simply focus on the ones that have strength. Whatever that is pumping and has been pumping for multiple days in a row, there is usually a reason why they are pumping. And so you want to buy into strength. You don't want to be, you know, speculating into stuff that is absolutely not moving, thinking that, oh, Because these other coins pumped, this should follow. One thing you need to understand, that kind of methodology may have worked in 2018, and it may have worked a little less good back in 2021, but absolutely this time around, do not use that approach. That is one of the most stupid things that you can do. Why do I say this? Just to give you an idea, back in 2021, there were a grand total in terms of all of the cryptos that existed in the world, there were 10,000 coins. 10,000 in 2021. The problem now is that in 2025, currently I believe the number is closer to 15 million Crypto tokens, which means there is a lot of token dilution. Like essentially assuming that the money supply stays the same, there is now many more cups that, you know, this water gets to flow in. And so it only makes sense that only the strongest ones and the reason for acquiring, you know, this liquidity, only they will kind of continue to receive this water or liquidity. And so for the rest, just because they are not performing does not mean that they will eventually perform. That is one of the things you need to get out of your head immediately and focus on the ones that have strength. I'm not going to get into equities within this video since this is mainly focused on crypto, but let's talk about now the medium term, right? That was the short term, right? This is basically what you do in the next 90 days. It's basically unless things change and unless, you know, the dollar index as well as bond yields get in the way, then in the short term, I think there is going to be a lot of optimism when it comes to the crypto markets. Now let's talk about the medium term. Medium term, there are basically 3 cases that could potentially play out. One is your bullish case, one is a bearish case, and one is kind of like a baseline case where the talk drags on, the market will continue to chop sideways, and the rally loses steam, but no full breakdown. This is something that ideally we do not get because I think a lot of people are kind of losing their patience with, you know, what crypto is doing right now, where it's kind of pumping, but it's also spending long periods of time doing absolutely nothing slash retracing really, really hard. So let's talk about the bullish case, right? Let's say a deal is struck. The Fed goes into dovish mode. Essentially, this turns on the on switch for crypto and everything is going to fly to the moon. All coins go to the moon. Crypto goes to all-time highs. That is your bullish case. And that involves a bullish deal. Again, this can change. Like whatever conclusion that is, you will know within 90 days. If this happens, this is what you do. The bearish case is that talks collapse. All the tariffs come back. Then risk-off returns. Bitcoin is absolutely going to dump pretty hard. And so will the altcoins. Again, just like what I taught you just now about the macro conditions, if these tariffs per ton, it means that inflation is probably going to go up. And if inflation goes up, the Fed will have no choice but to raise interest rates. So this is a very solid example of second-order consequences where a lot of people just look at the first-order consequence, right? Okay, if this happens, then what? But then, you know, the reality of the world, the way it works is that there tends to be long-tail consequences. And in this case, we're looking at X-order consequences. So final trading note, what traders, well, what you should actually do is first of all, write the short-term momentum It doesn't matter whatever you believe. Oh yeah, the market— Trump's going to strike a deal, or Trump's not going to strike a deal. Doesn't matter. What's important is that you read what the market's telling you and to actually ride that short-term momentum. And once you get closer to August, especially if there is no deal yet, then you start hedging aggressively, right? You take your profits, don't leave it up to chance. And most importantly, do not— understand that this is a relief rally. This is not a trend reversal. And of course, the trend on a Bitcoin weekly chart and all of these other Risk on assets in terms of the weekly chart, they're still looking really good. Don't get me wrong, but still, just due to the nature, due to the short-term uncertain nature of the situation that we're in right now, play it safe, right? There's short-term momentum, but make sure you remember to take your profits, especially if there is no deal struck. Most importantly, this is something that you guys will be forced to follow because basically the fate of the entire world's markets rests on one man's shoulders and one man's mouth. Whatever he says. That's how the market's going to play out. So it's very important that you actually track this. Of course, you cannot predict anything. Like, again, Trump is unpredictable is one way to explain it. There is no way to kind of predict what he is thinking, you know, every time. So just play it cautiously. And most importantly, track DXY, track the Treasury bond yields, and just understand that all of this is temporary. This 90-day truce provides breathing room but resolves no fundamental issues between the US and China. Current price action reflects relief rather than fundamental Improvements or like trend reversals, and most importantly, prepare for potential volatility as the temporary agreement approaches its expiration date. Now, of course, this deal can be struck much, much sooner than August, but still, just keep an eye out. Approach this the way it's supposed to be approached, which is a temporary thing. But do not forget to actually ride this wave because a truce is still the truce. It's a positive piece of news, and it is something that. And again, I want you to think of how we have shaped this entire narrative, which is the fact that the Fed can wait and see means that they're not going to raise interest rates. that also gives crypto as well as other risk-on assets room to move. So, and yes, they will move, but watch out for any short-term changes in how all of this geopolitical tension is kind of playing out. By the way, if you enjoyed this video, this presentation was actually sent 2 days ago, like on the same day itself when the news was released, to subscribers of the newsletter. It was a pretty in-depth kind of report. And if you would like to get these reports much earlier on next time rather than wait for a YouTube video that comes out a few days after the fact, then feel free to click the first link in the description box below and sign up to the newsletter. I promise this is not one of those sales pitches or whatever. We're actually sending value in there every single day, in fact. And so yeah, if you enjoyed it, drop a like, subscribe to the newsletter, and subscribe to the channel. I'll see you guys in the next one. Bye-bye.