Bitcoin and Ethereum Slide as Fed Rate-Hike Bets Grow Ahead of Trump-Xi Summit

Bitcoin and Ethereum reversed course on Thursday, giving back a chunk of the gains that had pushed crypto to multi-month highs just a day earlier. The pullback comes as investors weigh two forces at once: a hawkish shift in Federal Reserve expectations and a high-profile meeting between President Trump and Chinese leader Xi Jinping that traders fear could shake risk assets the same way it did earlier this year.

Bitcoin and Ethereum Open Sharply Lower

Bitcoin opened Thursday down roughly 2% from Wednesday's level, slipping into the low-$80,000s during early U.S. trading hours after briefly touching an eight-month high the day before. Ethereum followed the same pattern, opening lower and extending its decline through the morning session. The reversal caught some traders off guard, since sentiment had turned notably bullish earlier in the week, with several analysts suggesting the prolonged "crypto winter" was finally coming to an end.

Rising Fed Rate-Hike Odds Weigh on Sentiment

The main driver behind the pullback appears to be shifting expectations around U.S. monetary policy. Futures markets are now pricing in a strong likelihood that the Federal Reserve will raise interest rates in October, with a smaller but still meaningful chance of a second hike in December. Because bitcoin and ethereum offer no yield of their own, tighter policy tends to make them less attractive relative to interest-bearing assets, and renewed inflation concerns have amplified that effect this week.

All Eyes on the Trump-Xi Summit

Adding to the uncertainty, President Trump and Xi Jinping are meeting again at the White House on Thursday, their second sit-down of the year following a trip to Beijing in the spring. The agenda reportedly covers trade, rare-earth materials, artificial intelligence and Taiwan — topics with the potential to move equities, bond yields and the dollar, with crypto typically following behind as a secondary reaction. Traders are wary because the last Trump-Xi meeting didn't play out the way many bitcoin bulls had hoped: instead of fueling a rally, it was followed by a decline of nearly 5% in bitcoin's price over the following week.

What It Means for Traders

Taken together, the two developments explain why crypto's rally has stalled just as it was gaining momentum. A more hawkish Fed reduces the appeal of non-yielding assets, while the Trump-Xi summit introduces a binary, headline-driven risk that could push prices in either direction depending on how the talks unfold. For now, many market watchers see the setup as a reason to hold existing positions rather than add fresh exposure, at least until there's more clarity on both the rate path and the outcome of the U.S.-China discussions.