#TradeWarEases After the rapprochement between America and China, is the crypto market in danger? Will liquidity exit?

America and China concluded high-level trade talks in Geneva, which for the first time had a 'friendly tone' after a long period of tension. They agreed to create a new economic advisory mechanism, which means they are trying to create a long-term understanding instead of remaining in a trade war cycle.

This immediately reflected on market movements.

America has reduced tariffs on Chinese imports from 145% to 30%. China responded with a similar reduction from 125% to 10%. The result is that global markets have begun to stabilize, and people are once again focusing on traditional exchanges.

How does this affect the crypto market?

Here is the crucial question: Will this global stability cause liquidity to exit crypto and return to exchanges? This could actually happen… and if it does, it will have a clear and dangerous impact, especially on high-risk assets in crypto.

Let's go back a bit and rearrange the events.

The crypto market is currently experiencing a strong recovery; the liquidity that entered came from financial institutions, individual investors, and hedge funds, all fleeing from inflation and high-interest rates.

But after the new agreement between America and China and the start of signs of interest rate cuts in America, investors are thinking.

Why take the risk of crypto with economic stability and opportunities in the traditional market? And here is the turning point.

Will liquidity actually exit?

The situation is not black and white. But let me simplify it for you.

A partial withdrawal is possible, and this is currently the most likely scenario.

The liquidity that entered crypto quickly for the purpose of quick profit will start to exit in stages. The beginning will be from small projects, meme coins, and currencies that have no real use. The market won't collapse, but there will be a significant and painful correction for some currencies.

A total withdrawal is a weak possibility in the event of a sudden rise in exchanges.

If a Bull Run occurs in global markets and institutions start converting their positions in crypto to stocks, then the market could lose 30–40% of its value in weeks.

Which currencies will be most affected?

Firstly, meme coins like $PEPE, $FLOKI, $DOGE, and $WIF are largely trend-based and social media-driven. If liquidity exits, these will be the first to fall quickly, and the drop could reach 40–50% in a very short time.

Secondly: altcoins that have no real value, i.e., any project without a strong team or without a real solution to a market problem, will be the first candidates to fall.

Thirdly, decentralized finance (DeFi) protocols like $AAVE, $MKR, and $SNX will be affected in one case: if the total value locked (TVL) starts to decrease, then the protocol itself will be affected and the price will drop accordingly.

Fourthly, the first-layer solutions like $SOL, $AVAX, and $ADA are strong currencies, but a portion of them comes from speculation, so a medium correction might happen, especially if liquidity shifts to Bitcoin.

And Bitcoin

BTC Bitcoin will be the most protected currency in this case because it is now considered a digital asset. If liquidity exits from altcoins, a large part will return to Bitcoin as a store of value. This means we might find Bitcoin stable or even increasing while the rest of the market bleeds. And this is, of course, in cases of medium, not total liquidity withdrawals.

The situation in numbers now

The market value of crypto is about 3.34 trillion, and Bitcoin's dominance is 63.8%. The price of Bitcoin is around 94 thousand dollars.

So what do we expect ahead?

If there is a partial withdrawal of liquidity: the market will drop a bit but will stabilize again. If there is a violent withdrawal, the market could drop to a market value of around 2.2 - 2.5 trillion, and small and speculative coins will temporarily evaporate from the market.

The calm between America and China could be beneficial for global markets but risky for crypto, which relies on the flow of rapid liquidity. Those who hold speculative currencies or meme coins must be cautious and start reviewing their portfolios. Because if liquidity exits, it won't exit all at once but will trickle out… and this means we need to monitor the market day by day and understand where the money is coming from and going.

And this is of course just an analysis and opinion, not financial advice 😊👻

#TradeWarEases