On July 1, Bitcoin (BTC) climbed to $109,000, nearing its all-time high. Other major cryptocurrencies followed, with Ethereum (ETH), XRP, and Solana (SOL) gaining between 3% and 7% in the past 24 hours. Open interest on BTC futures rose to 689,700 BTC, or about $75 bln. Overall crypto market capitalization grew by 2,92%, returning to the $3.5 trln level. Here's what drove the spike.
Major altcoins mirrored Bitcoin’s movement. Ethereum increased by 6,09%, XRP by 3,77%, and Solana by 4,17%. Among the top 100 tokens, most assets posted gains exceeding 7%.
Trump Announces Trade Deal With Vietnam
One of the triggers was a market reaction to Donald Trump's announcement of a new trade agreement between the U.S. and Vietnam. The deal includes tariff reductions on U.S. exports and new import duties on Vietnamese goods.
According to Trump, imports from Vietnam to the U.S. will now face a 20% tariff, and goods rerouted through third countries will be taxed at 40%. In turn, Vietnam agreed to drop all tariffs on American products. Trump described the agreement on Truth Social as a "zero tariff on American goods."
Inflation Expectations and M2 Money Supply
Another driver behind the crypto market rally was the growth in U.S. M2 money supply. According to fred.stlouisfed, in May, M2 rose by 4,5% year-over-year, reaching $21.94 trln. This is a new record, surpassing the previous peak of $21.86 trln from March 2022. M2 includes cash, demand deposits, savings, and time deposits.
Historically, Bitcoin tends to respond to M2 changes with a lag of 3 to 6 months. The current trend suggests a potential continuation of BTC growth if money supply expansion persists.
Derivatives Market Sees Spike in Activity
Data from Coinglass shows Bitcoin’s rally triggered a surge in futures activity. Open interest increased from 651,660 BTC to 689,780 BTC, reflecting the total volume of active derivative contracts.
The rise also led to liquidations amounting to $308.26 mln over the past 24 hours. Of this, $263.63 mln were short positions, and $44.6 mln were longs.
U.S. Eases Software Export Rules for China
Further momentum came from reports of the U.S. relaxing export restrictions on China. The Trump administration lifted licensing barriers for Electronic Design Automation (EDA) software exports to the Chinese market. This was confirmed by companies including Synopsys Inc., Cadence Design Systems Inc., and Siemens AG.
According to Bloomberg, Siemens has already restored full access for Chinese clients to its EDA products, while Synopsys and Cadence are preparing to resume exports. The U.S. Department of Commerce has not commented on the decision.
This policy shift is part of a broader trade arrangement between the U.S. and China. Washington agreed to resume exports of EDA software, ethane, and aircraft engines in exchange for expedited Chinese approvals on critical mineral exports. The U.S. also allowed oil product shipments to China, though tanker offloading is still restricted.
Bloomberg notes this is the first time the U.S. has included export controls - usually viewed as national security tools - in trade negotiations.
Wave of FOMO Across Platforms
According to Santiment, the wave of FOMO (fear of missing out) triggered by these developments spread across major platforms including X, Reddit, Telegram, 4Chan, BitcoinTalk, and Farcaster. Analysts warned that during periods of extreme retail investor greed, markets often correct or pause, suggesting a possible short-term pullback following the sharp rally.
This post is for informational purposes only and is not an ad or investment advice. Please do your own research making any decisions.
