A number of stock market, monetary, and geopolitical factors are putting significant pressure on the digital asset market. Experts link today’s negative dynamics to the decline in the NQ 100 technology index, which has continued for three consecutive sessions after Broadcom published disappointing forecasts for chip production for artificial intelligence technologies. This may signal a weakening of investor interest in this area. Since the AI segment currently defines the global dynamics of risk assets, its slowdown has a negative impact on their movement.
In addition, the crypto community was disappointed by the announcement from Strategy Inc., which reported its first BTC sale since 2022, selling 32.0 tokens to finance dividend obligations on preferred shares. Experts note that the decline in the price of the world’s leading cryptocurrency is generally problematic for the largest public holder of “digital gold”: it is currently trading below the average price at which the organization acquired it, increasing losses and raising the likelihood of further asset sales. Nevertheless, Strategy Inc. CEO Michael Saylor remains optimistic, linking the negative trend to investment redistribution. He said that the proceeds are being invested specifically in AI technologies, so the sector as a whole should not suffer. It is also worth noting that investor uncertainty about the reliability of cryptocurrencies has been intensified by another scandal related to blockchain vulnerabilities: this week, Shielded Labs discovered a critical error in Zcash Orchard token generation that had existed since 2022 and allowed the creation of an unlimited number of fake coins.
On the other hand, the U.S. dollar is receiving support amid the growing likelihood of tighter monetary policy from the U.S. Federal Reserve by the end of the year. In April, the consumer price index rose from 3.3% to a three-year high of 3.8%, the producer price index increased from 4.3% to 6.0%, and the personal consumption expenditures indicator reached 3.8%, while the labor market remains stable. If the May employment data published today at 14:30 (GMT+2) comes in positive, with nonfarm payrolls expected to increase by 85.0K and unemployment to remain at 4.3%, a possible interest rate hike in the medium term would further strengthen the dollar against alternative assets. Demand for the currency is also supported by the escalation of the conflict in the Persian Gulf region: despite politicians’ statements about the continuation of negotiations, the sides are effectively close to a new round of full-scale military confrontation and are already carrying out mutual attacks on infrastructure, stimulating purchases of the dollar as a safe-haven asset.
Overall, the situation in the digital asset segment is deteriorating, as confirmed by the decline of the Fear and Greed Index to a three-month low of 12. Under these conditions, most leading cryptocurrencies may continue their negative dynamics or move into consolidation in the near future.
