Bitcoin 110K, Ethereum 4K: US-China & Fed Policy Drives Crypto
Bitcoin And Ethereum Soar: Decoding The Drivers From US-China De-escalation And Fed Policy
The global cryptocurrency market is experiencing a robust recovery phase, marked by Bitcoin's (BTC) impressive return above the $110,000 mark and Ethereum (ETH) reclaiming the $4,000 threshold. This upward momentum is not only a sign of investor confidence but also reflects positive shifts in the global macroeconomic landscape, particularly the de-escalation of trade tensions between the United States and China, coupled with the Federal Reserve's (Fed) potential for monetary policy easing.
The combination of these factors has created a favorable environment for risk assets, channeling capital into the cryptocurrency market. This article will delve into analyzing the main drivers behind the recovery of the world's two leading cryptocurrencies.
Bitcoin And Ethereum Price Developments: Key Milestones
In recent periods, both Bitcoin and Ethereum have demonstrated their ability to reach and sustain impressive price levels, capturing the attention of investors.
Regarding Bitcoin, its price surpassed the $100,000 mark by the end of 2024 and continued to rise sharply. Notably, at one point, Bitcoin exceeded $122,000 in August 2025, following a significant executive order in the U.S.
Bitcoin's price surpassed $100,000 by the end of 2024 and continued to surge, even exceeding $122,000 in August 2025 after President Trump signed an executive order paving the way for U.S. 401(k) retirement funds to invest in cryptocurrencies.
Although the market experienced short-term corrections, such as a drop from $121,000 to $104,000 due to tariff threats, the subsequent recovery trend quickly brought prices back to crucial thresholds.
As for Ethereum, it also recorded impressive growth momentum. In March 2024, ETH first touched the $4,000 mark after more than two years. By August 2025, Ethereum had surpassed $4,887, setting a new all-time high price.
By August 2025, Ethereum had surpassed $4,887, setting a new all-time high price, amid expectations of Fed policy easing.
In early October 2025, ETH also reached over $4,500, indicating sustained growth.
Impact Of US-China Trade Tensions
Trade tensions between the world's two largest economies have always been a factor with a profound impact on global market sentiment and risk assets. When U.S. President Donald Trump signaled that the trade war with China was "unsustainable" and high-level dialogues were expected to continue, it alleviated concerns about additional tariffs.
Conversely, when tensions escalate, the cryptocurrency market often experiences sell-offs. Prior to this recovery phase, Bitcoin and Ethereum were heavily impacted by threats of 100% tariffs on goods from China.
Immediately preceding the recovery phase, the cryptocurrency market experienced a massive sell-off, with Bitcoin and Ethereum heavily impacted, as President Trump threatened to impose 100% import tariffs on goods from China.
The shift in tone from U.S. leaders, particularly President Trump, played a crucial role in reshaping market sentiment, moving from apprehension to optimism.
The Role Of Monetary Policy From The Federal Reserve (Fed)
The Fed's monetary policy is an extremely critical macroeconomic factor, capable of shifting global capital flows. When the Fed signals a potential slowdown in monetary tightening or even interest rate cuts, the market typically interprets this as a policy easing move.
Lower interest rates reduce the appeal of traditional safe-haven assets and fixed-income investments, encouraging capital to flow into riskier assets such as stocks and cryptocurrencies.
In September 2025, the Fed made a significant move:
• In September 2025, the Fed cut the benchmark interest rate by 25 basis points, signaling a shift towards monetary easing.
• The market is also pricing in a very high probability (91.9%) of another 25 basis point interest rate cut in October 2025. These developments have triggered a rise in gold prices and increased volatility in the Bitcoin and DeFi markets, demonstrating the direct and powerful impact of monetary policy.
Signals From The U.S. Government: Impact Of Import Tariff Policies
Statements and policies from the U.S. President directly influence the market. News that President Trump signaled a relaxation of import tariff policies played a crucial role in alleviating market concerns and fostering positive sentiment.
For instance, in May 2025, a temporary trade agreement between the U.S. and China, involving reduced import tariffs, created a positive ripple effect across global markets. Reduced tariffs not only boost consumption but also enhance the competitiveness of domestic goods, strengthening investor and business confidence.
Global Market Sentiment And Other Supporting Factors
The combination of easing trade tensions and the Fed's accommodative monetary policy has created a "risk-on" sentiment – investors are more willing to take on risk in pursuit of returns, driving capital into riskier assets like cryptocurrencies.
Another major driving force is the continuous inflow of capital into Bitcoin ETFs.
Continuous inflows into Bitcoin ETFs remain a significant driver pushing prices higher. As of September 2025, global Bitcoin ETFs have attracted nearly $3.1 billion in net inflows, bringing the total to over $22 billion since the start of 2025.
Institutional investors are increasingly accepting cryptocurrencies as a mainstream asset class, with the number of publicly traded companies holding Bitcoin surging. Clearer regulatory developments and broader acceptance by financial institutions are also key factors supporting growth.
Risks And Prospects Of The Crypto Market
• Price Volatility: Cryptocurrencies remain known for their significant price volatility, driven by factors such as market sentiment, regulatory news, and macroeconomic trends.
• Financial Leverage: A wave of speculation using excessive financial leverage can lead to a cascading liquidation effect when prices reverse.
• Regulation: Despite positive signals, the lack of robust regulation for exchanges can still cause major fluctuations.
However, with a supportive macroeconomic backdrop, increasing institutional adoption, and technological advancements, the outlook for the cryptocurrency market in 2025 is still largely positive, with many experts expecting Bitcoin to reach higher milestones by year-end.
Disclaimer: This article is intended solely to provide information and market insights at the time of publication. We make no promises or guarantees regarding performance, returns, or the absolute accuracy of the data. All investment decisions are the sole responsibility of the reader.