Bitcoin rose about 3.2% on May 7, 2025 morning in Singapore, reaching over US$97,500 before experiencing a slight decline.

Ether, the second-largest cryptocurrency, increased by as much as 4.2% during the same timeframe.

This rise followed news of upcoming trade discussions involving US Treasury Secretary Scott Bessent, Trade Representative Jamieson Greer, and Chinese officials in Switzerland.

The talks have generated optimism regarding potential progress in easing trade tensions between the US and China.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Bitcoin’s evolving role as a geopolitical hedge

Bitcoin’s rise following the announcement of US-China trade talks continues its established pattern of responding to geopolitical developments, which has become increasingly pronounced in recent years.

During previous tensions in the US-China trade relationship, Bitcoin occasionally surged as investors sought alternatives to traditional assets, establishing its reputation as a potential hedge against geopolitical instability1.

The cryptocurrency’s reaction to trade news differs markedly from its response to the India-Pakistan conflict mentioned in the article, which traders reportedly “totally ignored,” suggesting the market has developed a selective sensitivity to different types of geopolitical events.

This selective response demonstrates Bitcoin’s maturing identity in the financial ecosystem, with investors increasingly viewing it as responsive to global economic relationships rather than regional conflicts.

Research shows that following tariff announcements by the US in past years, Bitcoin and Ethereum prices typically rose, indicating a fairly consistent pattern of flight to digital assets during trade uncertainty2.

2️⃣ The evolution of Bitcoin’s relationship with China

Bitcoin’s current price movements in response to US-China relations represent a fundamental shift from its early market dynamics, when the cryptocurrency was deeply intertwined with the Chinese economy.

Between 2015 and 2017, over 90% of Bitcoin trading was conducted in yuan, creating a strong correlation between Bitcoin demand and the yuan’s performance, particularly during periods of yuan depreciation3.

This relationship dramatically changed after Chinese authorities cracked down on cryptocurrency trading in 2017, causing the yuan’s share of Bitcoin trading to plummet from 96% to just 14% within months as activity shifted primarily to USD-denominated markets3.