Solana drops 5%, Bitcoin below $80,000 as Xi warns Trump on Taiwan conflict

Bitcoin's $80,000 floor cracked under back-to-back inflation shocks, and Xi Jinping's Taiwan warning further dampened expectations of a recovery.

Donald Trump visited Beijing on Wednesday in the first visit to China by a sitting U.S. president in nearly a decade. Xi pressed Trump on Taiwan in their first meeting at the Great Hall of the People, with the Chinese leader using direct language that rattled risk sentiment globally.

"The Taiwan question is the most important issue in China-US relations," Xi said, per state broadcaster CCTV. "If it is handled well, bilateral relations can remain generally stable. If mishandled, the two nations could collide or even come into conflict, pushing the entire China-US relationship into a highly perilous situation."

Xi also called Taiwan's independence "fundamentally incompatible" with peace in the Taiwan Strait, adding that "peace in the strait is the greatest common ground between China and the United States."

China's readout of Xi's remarks appeared to be released before the meeting had concluded, thrusting the self-ruled island into the spotlight ahead of the formal closing statement.

In response, Taiwan's foreign ministry said the United States has "reaffirmed its clear and firm support" for the island, with the ministry calling Beijing "the sole risk to regional peace and stability," per FT.

The comments rattled Asian equities and the broader crypto market. BTC traded at $79,200 in Asian hours Thursday, down 2.3% over 24 hours and 2.2% over the past seven days, after slipping below the $80,000 level that had served as the floor for most of the past week, CoinDesk's price pages show.

Solana (SOL) led the cohort lower with a 5.6% drop to $90, giving back most of the weekly gains that had made it the standout altcoin for the past two weeks. Ether dropped 2.1% to $2,250 and is now down 3% on the seven-day, the second-weakest performer among the majors after BTC.

Among other majors, BNB shed 1.6% to $660 but held a 3.9% weekly gain, while XRP slipped 1.7% to $1.43. Dogecoin held in green territory at $0.1126, up 0.9% on the day, the only major in the cohort to post a 24-hour gain.

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% in early trading.

Mainland Chinese shares fell 1.3%, having touched their highest level since 2021 ahead of the talks. The offshore yuan edged up for an 11th day, the longest winning streak since September 2017, suggesting capital is starting to position for whatever comes out of the summit.

The crypto sell-off compounded pressure from Wednesday's producer price index print, which came in at 1.4% month-over-month against a 0.5% forecast and 6% year-over-year.

That followed Tuesday's CPI reading of 3.8%, the hottest inflation print 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 has been pricing in.

Not everything broke down, however. Cisco shares jumped 20% in extended trading after a stronger-than-expected sales outlook, and 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 bid even as the broader risk tape turns choppy, which is the same divergence that has been running for the past three weeks.

The next test for bitcoin sits at the $78,000 level, which marked the early-May low before the rally to $82,000. A break below that 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.