The negative dynamics are developing under the influence of several factors, with geopolitical and monetary drivers remaining the key ones. A new escalation of the U.S.–Iran conflict has put the approval of a peace deal at risk: U.S. aircraft damaged Iranian military facilities on the coast of the Strait of Hormuz and destroyed four drones, while the Islamic Revolutionary Guard Corps responded by attacking an enemy base in Kuwait. In addition, the U.S. Treasury Department imposed sanctions on several officials from Iran’s newly created administration for the control of water resources in the Persian Gulf, accusing them of extorting money from vessels passing through the key maritime area and urging commercial organizations not to pay transit fees to Tehran. Against this backdrop, investor demand for the U.S. dollar as a safe-haven currency increased, putting pressure on risk assets.
According to CoinGlass, leveraged cryptocurrency positions worth almost 1.0 billion dollars were liquidated on Thursday alone, with long positions accounting for 93.0% of losses. BTC and ETH led by liquidation volume, at 386.0 million dollars and 246.0 million dollars, respectively. It is worth noting that today’s reports that the United States and Iran agreed to extend the ceasefire by 60 days to continue consultations on Iran’s nuclear program did not support cryptocurrency prices, as U.S. President Donald Trump has not yet approved the extension, and the situation in the Persian Gulf remains tense.
Another reason for the decline was the increased likelihood of tighter monetary policy from the U.S. Federal Reserve after the release of U.S. statistics. According to revised data, gross domestic product grew by 1.6% in the first quarter instead of the expected 2.0%, while the April Personal Consumption Expenditures price index reached 3.8% in headline terms and 3.3% in core terms. Thus, the U.S. economy remains resilient despite a significant increase in price pressure, which could prompt officials to shift toward a more hawkish tone later this year.
Among the positive developments for the crypto community this week, the U.S. Securities and Exchange Commission registered blockchain platform and stablecoin issuer Paxos Securities Settlement Company, a subsidiary of Paxos and issuer of several stablecoins and digital assets, including PayPal USD (#PYUSD), Global Dollar (#USDG), and Pax Gold (#PAXG), as a clearing agency. The company said the approval represents a critical element of financial market infrastructure as blockchain technology and traditional capital markets continue to converge. In a post on Truth Social, Trump promised to create a future-proof digital asset market structure that opponents of digital assets would not be able to block under future administrations. Experts believe the U.S. president is hinting at faster work on the Digital Asset Market Clarity Act, which faces major challenges before a full vote in the Senate. Republicans hold only a narrow majority there, and to pass the bill they will need votes from Democratic senators. However, some senators are demanding that ethics provisions be added to the bill, prohibiting current officials from financially benefiting from crypto assets.
Sentiment in the industry continues to deteriorate, as shown by the latest CryptoQuant report. According to the data, growth among large BTC holders with 1.0–10.0 coins and medium holders with 0.1–1.0 thousand coins has almost stopped since the beginning of the year, while the Fear and Greed Index has returned to the “extreme fear” zone at 23. Under these conditions, most major cryptocurrencies may shift into consolidation.
