A thawing in the trade stance from both the U.S. and China has sent risk assets higher in the hours since the U.S. stock market closed on Wednesday.

«The current tariffs and trade barriers are unsustainable, but we don’t want to decouple,» said U.S. Treasury Secretary Scott Bessent, disclosing plans to travel to Switzerland to meet with Chinese counterparts for trade talks this coming weekend.

«Senior U.S. officials have made a series of remarks hinting at adjustments to tariffs and have expressed, through various channels, a desire to engage with the Chinese side on tariff-related issues,» said a China Ministry of Commerce spokesperson. «China has carefully evaluated these messages from the U.S. side and, after fully considering global expectations, China’s own interests, and the appeals of American industries and consumers, has decided to agree to engage with the U.S.»

The news has quickly sent bitcoin (BTC) higher by about 3% to $97,200. Nasdaq 100 and S&P 500 futures have jumped about 1%.

Bitcoin (BTC) tightened its grip on the crypto market on Tuesday, with dominance surging to fresh four-year high as crypto traders rotated into the market’s anchor asset ahead of tomorrow’s key Federal Reserve policy meeting.

BTC held steady around the $94,000-$95,000 area, up a modest 0.4% over the past 24 hours and extending a tight-range trading pattern that has persisted since the weekend.

Meanwhile, the broad-market CoinDesk 20 Index slipped 0.7% lower, with Ethereum’s ether (ETH), and native tokens of Sui (SUI), Aptos (APT) and Polygon (POL) dragging the benchmark lower.

A check on traditional markets showed stocks booking back-to-back losses, with the S&P 500 and the tech-heavy Nasdaq closing 0.7%-0.8% down, once again underperforming BTC.

Despite the lack of major price action, focus has increasingly turned to bitcoin’s growing share of the overall crypto market: The so-called Bitcoin Dominance metric surpassed 65%, its highest reading since 2021 January, according to TradingView data, signaling capital consolidating into the asset perceived as the most resilient in the face of macroeconomic uncertainty.

Joel Kruger, market strategist at LMAX Group, described the current landscape as one of pause and anticipation. «The cryptocurrency market has remained largely stagnant since the weekly open, with prices settling into a holding pattern as investors await a pivotal catalyst,» he noted. «This impetus may arise from traditional markets, driven by updates on tariff-related economic impacts or the Federal Reserve’s anticipated FOMC decision on May 7.»

The Federal Reserve is widely expected to hold interest rates steady, according to the CME FedWatch Tool, but traders are on edge for any shift in Fed Chair Jerome Powell’s tone that could impact risk appetite.

Bitcoin volatility burst on the horizon

With bitcoin’s recent price action being extremely flat, the upcoming FOMC meeting «is rigged to cause significant volatility,» said Vetle Lunde, head of research at K33. He noted in a Tuesday report that BTC’s short term volatility is «abnormally compressed,» with the 7-day average dropping to the lowest level last week in 563 days.

«Such low volatility regimes in BTC tend to be short-lived,» Lunde said. «Violent volatility outbursts typically follow this form of stability once prices start to move, as leveraged trades are unwound and traders are reactivated into the market.»

He said that a significant cascade lower is unlikely, as funding rates for perpetual swaps are consistently negative. Similar periods historically offered good buying opportunities for medium and long-term investors, Lunde added, favoring «aggressive spot exposure» ahead.

The U.S. Commodity Futures Trading Commission (CFTC) has dropped its appeal in its case against Kalshi, a New York-based prediction market, according to a Monday court filing, finally clearing the way for the platform to offer political event contracts.

Under the conditions of the motion for voluntary dismissal, which is still subject to court approval, both parties will pay their own legal costs and Kalshi waives any right to sue the CFTC for the litigation.

«Today is historic. We have always believed that doing things the right way, no matter how hard, no matter how painful, pays off. This result is proof of that,” Kalshi CEO Tarek Mansour said in a statement. “Kalshi’s approach has officially and definitively secured the future of prediction markets in America.»

Kalshi’s fight with the CFTC began in 2023, when the regulator denied Kalshi’s plan to let users bet on which party would control the chambers of Congress. At the time of the denial, the CFTC — then under the leadership of former Chair Rostin Behnam — claimed that such contracts involved unlawful gaming and were “contrary to the public interest.”

That November, Kalshi sued the CFTC in Washington, D.C., claiming that the CFTC had overstepped its authority in attempting to block the contracts, and asking a judge to vacate the decision. The court sided with Kalshi in September 2024, clearing the way for the platform to list the political contracts.

Immediately after losing the case, the CFTC scrambled to undo the district judge’s decision. It applied for a 14-day stay of the order — basically, a two-week delay on Kalshi’s ability to list the contracts while the CFTC prepared for an appeal — and was denied. Then, it filed an appeal, reiterating many of the same arguments it had used in its original defense.

However, shortly after oral arguments in early January, U.S. President Donald Trump returned to office. His eldest son, Don Jr., joined Kalshi as a strategic advisor on January 13. Rob Schwartz, the CFTC’s general counsel at the time the appeal was filed, left the agency in April after withdrawing from the case in March.

Under the leadership of acting Chair Caroline Pham, the agency has changed its approach to crypto, cutting several pieces of crypto-related guidance and narrowing down its once-wide variety of enforcement task forces down to just two, in an effort to simplify its regulation and enforcement of the crypto industry.