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Bitcoin and most altcoins experienced gains on Wednesday as investors welcomed the upcoming US-China trade discussions. The cryptocurrency market also responded positively to a dip in crude oil prices ahead of the Federal Reserve’s upcoming interest rate announcement.

Bitcoin Hits $97,000 Amid Market Optimism

Bitcoin surged to $97,000, marking its highest level since February and bringing its market capitalization to over $1.92 trillion. Leading altcoins, including Stacks, Flare, JasmyCoin, and Dogecoin, also recorded gains, with prices climbing by over 3% in some cases.

The primary driver behind this rally is the scheduled meeting between senior officials from the US and China in Switzerland this weekend. These discussions aim to ease tensions between the two nations after the implementation of triple-digit tariffs earlier this year.

Trade Talks and Tariff Reductions

Reports suggest that China is considering measures to curb the flow of chemicals used to produce fentanyl into Mexico. In exchange, the US may contemplate reducing tariffs on Chinese imports, potentially lowering rates from 145% to 50%.

While the planned meeting is a positive step, analysts caution that reaching a comprehensive agreement may take time. Treasury Secretary Scott Bessent recently stated that a final deal could take up to three years to materialize.

Altcoin Gains and Falling Oil Prices

Altcoins such as Stacks, Flare, JasmyCoin, and Dogecoin benefitted from the broader market optimism, fueled in part by a decline in crude oil prices. Brent and West Texas Intermediate (WTI) crude prices fell by 0.35%, settling at $61 and $58 per barrel, respectively.

The combination of trade deal hopes and lower oil prices has eased inflationary concerns. This development reduces the likelihood of a recession, contrary to what some analysts had previously anticipated. Recent data suggests that the odds of a US recession have declined from 62% in April to 51%.

Federal Reserve Interest Rate Decision Looms

The rally in Stacks, Flare, JasmyCoin, and Dogecoin also comes ahead of the Federal Reserve’s interest rate decision. Analysts widely expect the central bank to maintain its current rate of 4.50%, despite political pressure from figures like Donald Trump.

Federal Reserve Chair Jerome Powell has consistently emphasized that interest rate cuts will only be considered if inflation trends toward the 2% target. Additionally, officials are monitoring the inflationary effects of recent tariffs before making any adjustments.

“Powell just stating the facts on the recent inflation data and repeating over and over that the Fed will react to tariff impacts on inflation and growth as they happen might be a dovish relief for investors,” noted one analyst.

Historical Impact of Interest Rate Decisions on Cryptocurrencies

Historically, Bitcoin, altcoins, and equities tend to perform well when the Federal Reserve cuts interest rates or signals potential reductions. For instance, the cryptocurrency market saw a significant rally during the COVID-19 pandemic amid rate cuts, followed by a correction in 2022 as the Fed raised rates aggressively.

Investors are closely watching the Federal Reserve’s tone and decisions, as they could influence future movements in the cryptocurrency market.

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