Politics Is the New Volatility: Why the Trump–Xi Crypto Rally Might Not Last

Cryptocurrency markets jumped on Sunday after U.S. President Donald Trump confirmed an upcoming meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in Seoul on October 31.

The announcement briefly lifted Bitcoin and major altcoins out of a weeks-long slump, sparking hopes that easing trade tensions between the world’s two largest economies could revive risk appetite in digital assets.

But beneath the surface, analysts warn that the rally might be built on thin ice. Political headlines — rather than fundamentals — have become the latest volatility trigger for cryptocurrencies, making Bitcoin’s trajectory increasingly tied to the unpredictable rhythm of global diplomacy.

“We’re going to meet in a couple of weeks. We’re going to meet in South Korea, with President Xi and other people, too,” Trump told Maria Bartiromo during an interview on Fox News. During the interview, Trump also praised Xi as “a very strong leader, a very amazing man,”adding that he hoped the meeting would lead to a “fair deal” between Washington and Beijing after months of escalating trade conflict.

The confirmation marked a striking reversal from Trump’s earlier stance. Just weeks ago, he dismissed the need for such talks and doubled down on new tariffs against Chinese goods — a move that triggered one of the worst crypto market crashes in history.

His statements sent shockwaves across the industry, wiping nearly $20 billion in liquidations from the crypto derivatives market within hours and pushing the Crypto Fear & Greed Index to “Extreme Fear” territory at 22.

That collapse underscored how politics has become the new volatility engine for cryptocurrencies. From presidential tweets to tariff threats, Bitcoin’s price action now mirrors the mood of global power plays — rising with optimism, crashing with confrontation.

A Fragile Rebound

Following Trump’s latest remarks, Bitcoin (BTC) gained about 2% to trade near $109,000, while Ethereum (ETH) and Binance Coin (BNB) rose 3.5%, and Solana (SOL) climbed almost 4%, according to data from TradingView. The synchronized rebound briefly boosted market sentiment, but traders remain cautious.

“Markets are reacting more to emotion than fundamentals,” said analysts at The Kobeissi Letter. “The recovery is mostly technical, driven by short covering after the liquidation cascade. The longer-term trend remains uncertain until there’s real progress on trade policy.”

That uncertainty reflects a broader shift in how cryptocurrencies behave. Once seen as a hedge against political and monetary instability, Bitcoin now increasingly tracks the same macroeconomic currents as traditional risk assets. Each diplomatic flare-up or tariff threat can move the crypto market as sharply as changes in interest rates or inflation data.

The correlation between politics and crypto volatility has tightened dramatically over the past year. During Trump’s previous tariff escalation in late summer, Bitcoin plunged alongside global equities, erasing more than 15% in a single week. Likewise, signs of a truce — such as Trump’s latest confirmation of talks with Xi — tend to spark quick, sentiment-driven rallies that often fade as fast as they form.

“Bitcoin has become a political asset,” said a Singapore-based digital asset strategist. “Every major statement from global leaders now acts as a market-moving event. The narrative has shifted from inflation hedge to geopolitical barometer.”

That dynamic poses a challenge for both traders and long-term investors. While diplomatic optimism may fuel temporary price spikes, the lack of concrete progress on trade or regulation leaves crypto exposed to the next political shock.

The Mirage of Market Calm

Market analysts note that, despite the recent rebound, liquidity remains thin and leverage high — conditions ripe for another sharp correction. The Fear & Greed Index, though recovering slightly, still signals caution, while open interest across derivatives exchanges remains elevated.

“Until Bitcoin decouples from political sentiment, volatility will stay high. Crypto isn’t trading on fundamentals right now — it’s trading on headlines.”

For now, optimism surrounding the Oct. 31 APEC summit may keep markets buoyant. But with Trump’s unpredictability and U.S.–China relations still hanging in the balance, traders know that one offhand remark or failed negotiation could send prices spiraling again.

The recent rally, then, may not signal a new bull cycle — just another reminder that in 2025, politics has replaced macroeconomics as crypto’s most powerful market catalyst.