Home Bitcoin News Bitcoin jumps as U.S.-China talks and short squeeze boost crypto

Bitcoin jumps as U.S.-China talks and short squeeze boost crypto

Bitcoin price rally

The cryptocurrency market saw renewed bullish momentum this week, with Bitcoin briefly retesting the $110,000 level following a sharp short squeeze. This upward push was largely driven by optimism surrounding ongoing U.S.-China trade discussions in London, which boosted investor sentiment across risk assets.

While Bitcoin led the initial move, Ethereum outperformed with a notable 7% rally. Other altcoins, particularly in the DeFi and mid-cap sectors, also posted strong gains. Despite this encouraging start to the week, analysts remain cautious about the sustainability of the rally due to thin liquidity and the absence of solid macroeconomic breakthroughs.

U.S.-China Trade Talks Spark Rally

According to crypto trading firm QCP Capital, Bitcoin surged from $107,000 to over $110,000 overnight after reports of renewed dialogue between the U.S. and China emerged. The talks, held in London, rekindled hopes of easing trade tensions between the world’s two largest economies — a factor that historically supports global markets.

“BTC rallied from $107K to over $110K overnight on renewed optimism around U.S.–China trade talks in London,” QCP stated. “Initial headlines suggested progress, triggering a euphoric market reaction. But with no concrete resolutions, global risk assets quickly pulled back.”

At the time of writing, Bitcoin was trading at approximately $109,400. While that remains slightly below its intraday high, the move marked a significant recovery from last week’s slump.

Ethereum Leads the Charge

Ethereum [ETH] emerged as a key outperformer in the latest rally. The second-largest cryptocurrency by market capitalization jumped from $2,500 to $2,700, registering a 7% daily gain. This rise not only highlighted Ethereum’s relative strength compared to Bitcoin but also reinforced its growing role as a foundational layer for digital finance.

QCP Capital noted several factors supporting Ethereum’s momentum, including positive developments in U.S. legislation, regulatory clarity around stablecoins, and strong demand for ETH-based ETFs.

“Macro tailwinds are building for $ETH,” the firm added. “The GENIUS Act is progressing in the US Senate, Circle’s IPO is back in focus, and stablecoins are gaining regulatory clarity. Ethereum’s role as the infrastructure layer for real-world assets is gaining serious traction.”

DeFi and Mid-Caps Join the Rally

Beyond Bitcoin and Ethereum, the rally extended to DeFi and mid-cap tokens. Aave [AAVE] led the DeFi segment with a 17% increase to $296, while Uniswap [UNI] rose 13% to reach $7. Hyperliquid [HYPE] also saw a notable 15% spike to $41, bringing its Q2 recovery gains to an impressive 340%.

Although large caps like Binance Coin [BNB] and Ripple [XRP] showed minimal price action, the energy in the mid-cap segment suggested renewed appetite among speculative investors.

BTC Technical Analysis: Key Levels to Watch

From a technical standpoint, Bitcoin’s near-term trend remains cautiously bullish. The recent short squeeze indicates that many traders were caught off guard, likely contributing to the aggressive bounce above $110K.

However, BTC now faces significant resistance at the $112K level. If this barrier is not broken soon, a potential reversal could play out, especially given the current lack of fresh capital inflows.

Swissblock, a crypto analytics platform, warned that the Monday rally may not be sustainable without new liquidity entering the market.

“Without fresh inflows, Bitcoin may be running ahead of conviction,” Swissblock stated. “And yes, the ‘double top’ FUD is coming if $BTC fails to break out.”

This double-top concern refers to the price forming two similar peaks at the $112K region, potentially signaling weakening bullish momentum and an upcoming correction.

Macro Factors Remain in Focus

In addition to the U.S.-China trade narrative, upcoming macroeconomic data could further shape market direction. Traders are especially watching Wednesday’s U.S. inflation report, which could introduce volatility across financial markets, including crypto.

Should inflation data come in lower than expected, it may renew risk appetite and give Bitcoin the momentum it needs to test — and possibly break — above key resistance. Conversely, a hotter-than-expected print could dampen sentiment and trigger broader market pullbacks.

With so many macro elements in flux, BTC’s price action in the coming days could swing in either direction depending on developments in global policy and economic indicators.

Outlook: Cautious Optimism or Temporary Spike?

While Bitcoin’s short squeeze and trade-related optimism have given crypto markets a boost, the sustainability of this rally remains uncertain. Momentum in Ethereum and DeFi is encouraging, but low liquidity and resistance levels present challenges.

BTC technical analysis suggests that $112K is a critical level for bulls to conquer. Without a convincing breakout, the risk of a pullback grows — especially if macro catalysts like inflation data disappoint.

For now, crypto markets remain in a reactive phase, heavily influenced by news cycles and speculative trading. As always, traders should stay vigilant and prepare for both scenarios: continued upside if momentum persists, or a return to consolidation if resistance holds firm.

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Julie Binoche

Julie is a renowned crypto journalist with a passion for uncovering the latest trends in blockchain and cryptocurrency. With over a decade of experience, she has become a trusted voice in the industry, providing insightful analysis and in-depth reporting on groundbreaking developments. Julie's work has been featured in leading publications, solidifying her reputation as a leading expert in the field.

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