Crypto Markets and Equities Rally on Trade De-escalation Hopes

Cryptocurrency markets and U.S. equities both experienced strong rallies on Tuesday, buoyed by growing optimism surrounding a potential de-escalation in U.S. -China trade tensions. Gold, after reaching a record high in the previous session, saw a pullback as risk appetite seemingly returned to broader markets.

Bitcoin (BTC) led the crypto surge, climbing 5.47% in the past 24 hours to reach approximately $92,800. Ethereum (ETH) also saw substantial gains, jumping 13.27% to trade around $1,790. Solana (SOL) recorded a solid increase of 6.73%, reaching $148.69. The overall cryptocurrency market capitalization reflected this positive sentiment, increasing by 5.99% over the last day to $2.91 trillion, per Coinmarketcap data.

Mirroring the crypto gains, U.S. stock markets staged a significant recovery. The S&P 500 surged by 2.51% to close at 5,287.76, a gain of 129.56 points. The Nasdaq 100 also saw a strong performance, rising by 2.63% or 468.11 points to reach 18,276.41.

Gold, which had touched a record high of $3,500 per ounce on Monday, saw profit-taking emerge as broader market sentiment improved. The precious metal retreated to trade at $3,334 per ounce, down 1.32% on the day.

The synchronized rally in both crypto and equities appears to be driven by increasing hopes of a thaw in U.S.-China trade relations. Sources attending a private event hosted by JP Morgan indicated that U.S. Treasury Secretary Bessent expressed optimism about a potential de-escalation with China, describing the current trade situation as "unsustainable," Reuters reported .

While Bessent acknowledged that formal negotiations have not yet begun, he suggested that a deal is possible, albeit likely to be a "slog." He emphasized that the U.S. objective is not to decouple the two economies, envisioning a "huge win" in the rebalancing of China's economy towards consumption and the U.S. economy towards manufacturing within two to three years. However, he also noted the uncertainty of whether Beijing is ready for such a shift.

Adding to the positive sentiment, President Trump adopted a less confrontational tone regarding China. When asked if he would pursue a hardline approach, Trump stated, "We're going to be very good to China," and indicated that the current tariff level on China "won't be as high as 145%." He further suggested that the China tariff would "come down substantially but won't be zero," expressing his belief that a deal with China is likely, Bloomberg reported .

In a separate development that likely calmed markets, President Trump also dismissed recent speculation, stating he has "no intention of firing Powell," seemingly reassuring investors about the stability of the Federal Reserve's leadership.