Trump eases trade rhetoric towards China: the crypto market sees a "V-shaped" reversal, long positions breathe a sigh of relief.

According to Bloomberg, after U.S. President Trump and Vice President Vance sent positive signals regarding the easing of trade relations with China, the cryptocurrency market, which experienced a big dump over the weekend, welcomed a significant rebound on Monday morning (Singapore time). The price of Bitcoin returned to above $115,000, having briefly fallen below $105,000; Ether also rebounded to around $4,200, escaping from a low of below $3,500. This rebound effectively alleviated the panic that arose last Friday due to Trump threatening to impose new tariffs, which led to a record $19 billion in cryptocurrency leveraged positions being liquidated and caused over 1.6 million traders to get liquidated.

Easing Geopolitical Risks: Trump's "Soothing" Promotes Market Rebound

Last Friday, Trump announced severe new tariffs on Chinese goods, triggering a chain reaction in the crypto assets market, setting a historical record of $19 billion in liquidations in a single day. However, last Sunday (October 12), Trump and his vice president Vance made open remarks seeking to reach a trade agreement with China, bringing signs of cooling tensions.

Richard Galvin, co-founder of the hedge fund DACM, stated that this rebound was primarily driven by Trump's "reconciliation message." This signal quickly reversed the selling spree over the weekend, indicating the crypto market's high sensitivity to geopolitical "headline news risk." As political uncertainty temporarily eased, the market's panic sentiment was released.

Leverage Liquidation "Great Reset": Crypto Market Eliminates Overheating Risks

This big dump was a brutal leverage washout event. According to Coinglass data, over 1.6 million traders were liquidated, while the third-largest stablecoin Ethena USDe briefly lost its peg, and major CEXs also experienced technical failures.

However, on a positive note, this liquidation has achieved the effect of "leverage reset." Coinglass research report points out that the Funding Rates paid by bullish traders betting on futures have fallen to the lowest level since the 2022 FTX collapse, marking "one of the most severe leverage resets in crypto history." Galvin believes that this reset in the derivatives market will lay a more solid foundation for mid-term price trends. Although the market has experienced growing pains, the excessively high leverage bubble has been eliminated, which is beneficial for healthier operations in the future.

The Recovery of Altcoins Lags Behind, Future "Tail Risks" Still Need to Be Cautioned Against

Although Bitcoin and Ethereum have rebounded quickly, the vast majority of altcoins have seen a relatively slow recovery, with their trading prices still far below the levels of October 9. This indicates that during the market correction, altcoins have been hit harder due to lower liquidity and are also more difficult to recover quickly.

Bitcoin recently reached a historic high of $126,251 on October 6, largely due to the Trump administration's pro-crypto policies. However, Galvin warned: "Looking ahead, like throughout 2025, headline risk remains very high, and the market could be affected at any time by further trade escalation comments or other 'left-tail risks.'" This means that geopolitical tensions continue to hang over the crypto market like a sword of Damocles.

For investors, although the short-term "V-shaped" rebound is encouraging, it is important to remain cautious before geopolitical uncertainties are fully resolved, avoid excessive leverage, and closely monitor the subsequent developments in Sino-U.S. trade relations.

Conclusion

The severe fluctuations and rapid rebounds in the crypto market clearly demonstrate the strong influence of macro geopolitical factors on risk assets. Trump's softened stance is like a timely rain, extinguishing the flames of panic in the market and facilitating a healthy "reset" of leverage bubbles. Although short-term panic has been released, geopolitical variables remain a key uncertainty factor for the future trends of the crypto market. Investors should view this event as a profound risk education, placing risk management and vigilance towards the external environment at the forefront while enjoying the growth dividends of the industry.

Disclaimer: This article is for news information only and does not constitute any investment advice. The crypto market is highly volatile, and investors should make decisions cautiously.