Cryptocurrency markets are experiencing a resurgence after a significant liquidation event totaling $19 billion, supported by indications of a temporary ceasefire in the ongoing US-China trade tensions.

Bitcoin (BTC) briefly surpassed a two-week peak of $116,400 on Monday, as investors look forward to two pivotal macroeconomic events this week: the anticipated Federal Open Market Committee’s interest rate decision this Wednesday and the potential US-China trade agreement expected to be finalized by Thursday.

Reports suggest that investor sentiments have shifted from “fear” to “neutral” on Monday, rejuvenated by news that the US and China may have established a “preliminary” agreement concerning import tariffs.

This recovery coincides with an impending meeting between US President Donald Trump and Chinese President Xi Jinping scheduled for Thursday, focused on trade negotiations that aim to avert further escalations between the leading global economies.

“The recent optimism surrounding the US-China trade negotiations sparked a rally in Bitcoin. Positive developments have elevated wider risk sentiment,” Wenny Cai, co-founder and chief operating officer at crypto derivatives exchange SynFutures, remarked.

BTC/USD, 24-hour chart. Source: Cointelegraph

Furthermore, Trump expressed confidence that the two nations would “come away with the deal” following Thursday’s talks, as reported by CNBC.

This indication of potential de-escalation has allowed Bitcoin to rise above the crucial short-term holder cost basis of approximately $114,000, reversing a decline triggered by renewed tariff threats from Trump, which had led to the previous $19 billion market crash at the beginning of October.

Regaining this milestone is vital for Bitcoin’s recovery, given that short-term holders are highly responsive to price movements. Sustaining prices below this threshold may lead to intensified selling pressure from such holders.

On Oct. 10, Trump announced a looming 100% tariff increase on Chinese imports effective Nov. 1 unless a trading deal is reached. This announcement led to a chaotic weekend in crypto markets, culminating in a historic liquidation event as Bitcoin briefly dropped to $104,000 by Oct. 17.

Wednesday’s interest rate decision is anticipated to further heighten demand for risk assets, including cryptocurrencies, with current market expectations indicating a 96.7% likelihood of a 25 basis points interest rate reduction by the Federal Reserve.