Bitcoin Drops, Ether Liquidations Surge After U.S. Price Floor Announcement

U.S. Treasury Secretary Scott Bessent announced today that the Trump Administration is imposing sweeping price floors across key sectors in the American economy. The move aims to protect American industries from what officials call “predatory pricing” by China. 

Under the new policy, the government will establish minimum prices for some materials and commodities, starting with rare earth materials. This positions local producers to compete against China’s historically low pricing. It can also serve as a countermeasure to potential retaliation by China, the world’s largest processor and exporter of rare earth minerals.

China controls over 90% of the global rare earth processing, and nearly 99% of heavy rare earths. These products are used in the production of magnets and components essential to both military and civilian technologies.

This complete dominance and abundance in the rare earth market allows China to offer the product at a far lower cost than the competition, which Bessent noted led to many industries going out of business worldwide.

The U.S. is one of the largest buyers of rare earth, spending anywhere from $500 million to $800 million annually on imports and strategic purchases. While the Administration claims that the new price floors are intended to protect local industries, it is likely no coincidence that the announcement comes just days after China imposed new restrictions on rare earth exports. 

Overall, the Trump Administration’s move appears aimed not only at protecting domestic producers, but also at insulating the U.S. from future supply shocks. So much so that Bessent emphasized the need for the U.S. to create a strategic mineral reserve. 

Can The Only Rare Earth Firm in The U.S. Benefit?

JP Morgan showed interest in investing in a U.S. strategic mineral reserve. While the majority of financial markets are now operating on shaky grounds, the news could benefit MP Material (NYSE: MP), the largest rare earth producer in the Western Hemisphere and the only company currently mining and processing rare earths in the United States.

The news of the potential clash between the two largest economies in the world over a rare earth dispute has been going around for some time. It is likely no coincidence that since April, the MP share is up by over 326%. 

Despite this strategic positioning, MP shares fell 8.89% on the day, as investors digested the broader implications of the price floor policy and China’s retaliatory export restrictions. But with the strategic reserve talks, it makes sense to think that MP Materials could play a big role in it. 

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Crypto Reacts Poorly to The News

Digital assets took the brunt of the impact as investors reacted to the pricing floors as yet another escalation to the trade war between the U.S. and China. Bitcoin hit as low as $110,818 in the day, marking a 1.6% decrease in the last 24 hours. 

Altcoins also took a tumble. Ethereum slipped below $4,000, while assets like LINK and SUI are down by 5% in the day. 

The volatility caught some investors off guard. Data from CoinGlass reveals that the majority of liquidations of the day came from Ether traders, totalling over $430 million in liquidations across the entire market, most of which were investors going long.

Overall, October 15 marks another day where geopolitical developments spilled over into financial markets. The total cryptocurrency market capitalization is now down by nearly 10% since October 10, when Trump posted the first announcement of the 100% additional tariffs on China.