Rare earth sanctions, soybean retaliation—this time, is the crypto world the one getting "blocked"?

Recently, the US-China trade tensions have escalated. On the surface, it appears to be about tariffs, but at a deeper level, it’s a contest over control of rare earths. Surprisingly, this game ultimately impacts the crypto world as well.

Why Are Rare Earths So Critical?

China controls about 90% of the global rare earth processing industry—not just mining (which accounts for 30-40% globally), but more importantly, extraction, separation, and purification. These high-pollution, high-cost technologies are monopolized by China.

Where are these rare earths used? In electric vehicle magnets, chips, 5G infrastructure, military navigation systems… Without them, industry leaders like Tesla and BYD would have to halt production. In other words, China holds the key to the high-tech industry’s lifeline worldwide.

Why Are American Farmers “Backstabbing” Trump?

After the trade war began, China stopped importing US soybeans. Despite the US government offering $10 billion in subsidies, it couldn’t compensate for the $100 billion loss faced by farmers. As this year’s soybean harvest was abundant but there were no buyers, farmers bypassed Trump and directly approached China, accepting payments in RMB to sell their soybeans.

What does this tell us? Even the most steadfast supporters can change their tune when survival is at stake. Crypto investors, who often hold onto their positions despite losses, are experiencing a similar mentality.

What Should Crypto Investors Be Cautious About?

Trade tensions not only impact traditional economies but can trigger several chain reactions:

1. Liquidity Risks: US government shutdown → lack of economic data → uncertainty in Federal Reserve policies → rising risk aversion → capital outflows from high-risk assets (including cryptocurrencies).

2. Black Swan Risks Increase: Greater political uncertainty makes sudden policy moves more likely to cause market crashes. The crypto market, with its high leverage, can be wiped out by a single policy announcement.

3. RMB Narrative Reversal: If the US and China reach some form of agreement, the RMB could appreciate, which would alter the entire crypto market’s pricing logic.

What’s Next?

In the short term, a resolution seems likely—under a scenario where both sides hurt each other more than themselves, the “peaceful” approach might prevail. However, Trump’s “winning mentality” suggests he might keep pushing, creating repeated risk windows for the crypto market.

The key is whether an agreement is reached before December 1st. If not, a combination of rare earth sanctions, soybean import halts, and US stock declines could occur simultaneously, making it difficult for the crypto market to remain unaffected.

Core Advice: Technical analysis can help identify entry points, but news and geopolitical developments determine the direction. Stay closely tuned to the US-China Commerce Departments’ updates or reduce leverage and hedge risks in advance. This isn’t just a technical issue; it’s a geopolitical one.