China’s Rare Earth Dominance: Implications for Crypto and Tech Sectors
China’s rare earth production reached approximately 270,000 metric tonnes in 2024, representing 69% of global output, according to data from The Kobeissi Letter and the US Geological Survey. This significant dominance has tripled since 2014 and has profound implications for both traditional and cryptocurrency markets.
Rare earths are critical components in the manufacture of high-tech products, including electric vehicle batteries, semiconductors, and renewable energy technologies. China’s control over this market strengthens its influence over critical minerals essential for these industries, directly impacting technology stocks and crypto mining operations that rely on advanced hardware.
Market Implications
The cryptocurrency sector is particularly sensitive to supply chain disruptions in rare earth elements. Traders are advised to monitor rare earth market trends closely, as any supply constraints or policy changes from China could affect the broader cryptocurrency sector and related equities.
Tokens associated with supply chain transparency and green technology, such as VeChain (VET) and Energy Web Token (EWT), have shown increased interest. VET saw a 2.5% price increase to $0.035 on Binance, with trading volume spiking by 18% to $45 million. EWT traded at $3.10, up 1.7%, with volume rising by 10% to $1.2 million.
Technical Analysis
Bitcoin’s Relative Strength Index (RSI) stood at 52, indicating neutral momentum. Ethereum’s RSI was slightly lower at 49, signaling balanced market conditions. On-chain metrics show sustained user engagement, with BTC’s daily active addresses reaching 620,000.
The 30-day rolling correlation between Bitcoin and the S&P 500 was 0.42, indicating a moderate positive relationship. This suggests that further dips in stock markets due to rare earth supply fears could pressure BTC and ETH prices.
Trading Strategies
Traders should watch for potential volatility in crypto markets if rare earth supply concerns escalate. Longing tokens like VET or EWT on dips could be a strategy, while maintaining stop-loss orders around key support levels remains prudent for risk management.
