Bitcoin falls below $80,000 after Xi warns Trump on Taiwan

Bitcoin’s support at $80,000 finally gave way, dragged down by a double dose of hot inflation data and fresh geopolitical tension from U.S.-China talks. The crypto market took another hit Thursday after President Xi Jinping warned President Trump during their Beijing summit that mishandling the Taiwan issue could lead to “collision or even clashes.”

Bitcoin and major altcoins slump

Bitcoin traded at $79,200 in Asian hours, down 2.3% over the past day and 2.2% for the week, according to CoinGecko. The $80,000 level had held as a floor for most of the previous week, but it cracked under the combined weight of inflation surprises and the Taiwan warning.

Solana led the decline among major cryptocurrencies, dropping 5.6% to $90. That erased most of the weekly gains that had made it the standout altcoin for the past two weeks. Ether fell 2.1% to $2,250 and is now down 3% on the week, making it the second-weakest performer after Bitcoin.

BNB slipped 1.6% to $660 but still held a 3.9% weekly gain. XRP dropped 1.7% to $1.43. Dogecoin was the only major to post a 24-hour gain, rising 0.9% to $0.1126.

Geopolitical tension rattles risk assets

The sell-off gained momentum around the Trump-Xi summit, the first visit to China by a sitting U.S. president in nearly a decade. China’s readout of Xi’s remarks appeared to be released before the meeting had even concluded. That thrust the self-ruled island of Taiwan into the spotlight and rattled risk sentiment across global markets.

Asian equities swung between gains and losses on the back of the friction. MSCI’s Asia Pacific index slipped 0.1% after rising as much as 0.8% earlier. Mainland Chinese shares fell 1.3%, having touched their highest level since 2021 just ahead of the talks. The offshore yuan edged up for an 11th day, its longest winning streak since September 2017, suggesting capital is starting to position for whatever comes out of the summit.

Inflation data complicates Fed rate path

The crypto sell-off compounded pressure from Wednesday’s producer price index reading, which came in at 1.4% month-over-month against a 0.5% forecast and 6% year-over-year. That followed Tuesday’s CPI print of 3.8%, the hottest inflation number in almost three years.

The back-to-back inflation surprises complicate the Federal Reserve’s path to easing rates later this year, removing one of the structural tailwinds crypto had been pricing in. I think investors are starting to realize that rate cuts might not come as quickly as hoped.

Not everything broke down, however. Cisco shares jumped 20% in extended trading after a stronger-than-expected sales outlook. A gauge of Asian technology shares climbed as much as 2.3% to a record high. Nasdaq 100 futures advanced 0.2%. The AI trade is still getting bids even as the broader risk tape turns choppy, a divergence that has been running for the past three weeks.

Key support levels for Bitcoin

The next test for Bitcoin sits at $78,000, which marked the early-May low before the rally to $82,000. A break below that level would put the late-April capitulation zone in play. Holding above keeps the structural buyers’ case intact heading into the next round of macro data and the back end of the Trump-Xi talks.

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