Bitcoin Surges to $97,000 Amid India-Pakistan Tensions and US-China Trade Talks on May 7, 2025

Bitcoin surged past $97,000 on May 7, 2025, peaking at $97,446 amid geopolitical tensions and economic developments. The rise followed India's missile strikes on Pakistan, escalating regional conflict, and renewed US-China trade talks in Switzerland. Despite initial volatility, Bitcoin rebounded, supported by strong futures market activity and increased trading volumes. Investors are also anticipating the Federal Reserve's interest rate decision, with expectations of steady rates. On-chain data shows increased Bitcoin activity, while altcoins like Cardano and Litecoin also saw gains.

Bitcoin Climbs Despite Geopolitical Volatility

Bitcoin’s price action over the past 48 hours has been marked by sharp swings, initially dipping to $93,500 following India’s missile strikes on targets in Pakistan and the disputed Kashmir region. The operation, dubbed “Operation Sindoor,” was launched in retaliation for a terror attack in Pahalgam that killed 26 civilians. Pakistan responded with countermeasures, escalating fears of a broader conflict.

Despite the initial sell-off, Bitcoin quickly rebounded, breaching the $97,000 mark by Tuesday evening. According to Coinglass data, BTC broke through a significant cluster of $734 million in short positions around the $95,600 level, triggering liquidations and fueling upward momentum. The price later stabilized around $96,500 during Asian trading hours on Wednesday.

Market participants attributed the rebound to Bitcoin’s perceived role as a hedge against geopolitical instability. “Volatility in the markets is soaring as Bitcoin surges to $97K from the intensifying conflict between India and Pakistan,” said Nick Ruck, director at LVRG Research, in a message to CoinDesk. He added that the rally was unexpected, given that many investors were de-risking ahead of the Federal Reserve’s policy meeting.

US-China Trade Talks Add to Market Optimism

In parallel, the announcement that US and Chinese officials will meet in Switzerland to restart formal tariff negotiations provided a boost to risk assets, including cryptocurrencies. The talks mark the first significant diplomatic engagement since the two countries imposed tit-for-tat tariffs in April, with the US raising duties on Chinese imports to 145% and China responding with 125% tariffs on American goods.

Bitcoin rose approximately 3% following the announcement, with Treasury Secretary Scott Bessent confirming plans to travel to Switzerland for the talks. China’s Ministry of Commerce also signaled willingness to engage, citing global expectations and domestic economic interests.

The thaw in trade relations contributed to a broader risk-on sentiment, with futures on the Nasdaq 100 and S&P 500 also posting gains. Analysts noted that easing trade tensions could reduce macroeconomic uncertainty, indirectly supporting digital assets.

Traders Position Ahead of Federal Reserve Decision

The Federal Open Market Committee (FOMC) is set to announce its interest rate decision later today, with markets widely expecting the Fed to hold rates steady in the 4.25%–4.50% range. However, attention is focused on Chair Jerome Powell’s tone and any forward guidance regarding a potential rate cut in June.

Bitcoin traders have been actively positioning ahead of the meeting. Data from Cointelegraph and FXLeaders shows a bullish cluster of long positions forming around the $94,400 level in the futures market. Open interest in Bitcoin futures rose by $189 million in recent hours, accompanied by a 15% increase in aggregated trading volume, indicating sustained buying interest.

Swissblock, an investment management firm, noted that Bitcoin’s momentum typically slows before FOMC meetings but tends to become volatile afterward. “BTC momentum tends to slow before FOMC meetings and then turns volatile afterward,” the firm stated in a recent analysis.

Luuk Strijers, CEO of crypto options exchange Deribit, observed moderate risk aversion in the options market. “We have only seen some nuanced demand for protective BTC puts, reflecting limited caution among sophisticated traders,” he said.

Market Sentiment and On-Chain Activity

Beyond macroeconomic and geopolitical catalysts, on-chain data also supports the current bullish trend. Ryan Lee, chief analyst at Bitget Research, highlighted a spike in active Bitcoin addresses, now at a six-month high. “Bitcoin’s recent rally to the $87,500–$97,500 range is backed by rising demand and renewed network activity,” Lee told CoinDesk.

Bitcoin dominance is nearing 55%, and hash rates continue to rise, further reinforcing the network’s strength. Meanwhile, Ethereum remains range-bound between $1,600 and $1,900, with sentiment more muted amid fewer catalysts and cautious capital rotation into altcoins.

Altcoins have also seen gains, with Cardano’s ADA leading the pack with a 3% increase over the past 24 hours. Legacy tokens like Bitcoin Cash (BCH) and Litecoin (LTC) surged as much as 10%, while Dogecoin (DOGE), XRP, and BNB posted more modest gains.

Industry Reactions and Broader Implications

Shivam Thakral, CEO of BuyUcoin, commented on the broader market dynamics: “The growing geopolitical uncertainty is fuelling volatility in financial markets. Bitcoin briefly breached the $97,000 mark, defying macroeconomic pressures.”

Alankar Saxena, CTO of Mudrex, pointed to policy developments and upcoming upgrades as contributing factors. “Sentiment improved ahead of the FOMC meeting and New Hampshire’s authorisation of the ‘Bitcoin reserve bill’. Hopes of easing US-China trade tensions also helped,” he said.

Former Binance CEO Changpeng Zhao also weighed in, attributing part of the rally to the influence of Bitcoin-based ETFs. “Bitcoin is going up since most of the ETFs are Bitcoin-based,” Zhao said in a recent interview.

Bitcoin Surges to $97,000 Amid India-Pakistan Tensions and US-China Trade Talks on May 7, 2025

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