Most key fundamental factors continue to exert significant pressure on the sector. Escalating global geopolitical and trade uncertainty has triggered a crisis of confidence among investors toward digital assets, which have yet to be perceived as a universal store of value. Risks of a potential military confrontation between the United States and Iran—capable of slowing global economic growth and driving energy prices higher—combined with the uncertain tariff policy of U.S. President Donald Trump, are pushing capital into traditional safe-haven assets, primarily gold. The U.S. dollar is also receiving support as expectations grow that the Federal Reserve will keep interest rates unchanged at least through midyear. Fed Chair Jerome Powell previously hinted that policy adjustments would be considered only if inflation returns to the 2.0% target or if the labor market shows clear signs of cooling. However, January data showed unemployment falling to 4.3% versus expectations of 4.4%, while nonfarm payrolls rose by 130,000—well above forecasts of 66,000 and December’s 48,000. Average hourly earnings accelerated from 0.1% to 0.4% month over month, exceeding expectations of 0.3% and reinforcing persistently elevated inflation. Preliminary estimates suggest headline inflation will remain at 2.5% in January, well above the Fed’s target.
Additional pressure on the crypto sector comes from weakness in U.S. technology stocks linked to software and from Coinbase’s fourth-quarter earnings report. Total revenue came in at $1.78 billion versus expectations of $1.83 billion, adjusted earnings per share were $0.66 compared with $0.86, and transaction revenue fell to $982.7 million from $1.046 billion in the previous quarter and $1.556 billion a year earlier. Institutional interest in crypto funds remains subdued, while the Crypto Fear & Greed Index is firmly in the “extreme fear” zone at 9, after hitting a yearly low of 5 earlier this week.
Among other developments this week, the U.S. Commodity Futures Trading Commission (CFTC) announced the creation of an Innovation Advisory Committee, bringing together 35 industry leaders including Coinbase CEO Brian Armstrong, Ripple CEO Brad Garlinghouse, Uniswap founder Hayden Adams, and others. CFTC Chair Mike Selig said the initiative aims to align regulatory decisions with current market realities and help establish clearer rules for the financial sector. Meanwhile, progress on the Digital Asset Market Structure and Transparency Act (CLARITY) has stalled in the U.S. Senate, as lawmakers have failed to reach consensus on incentive programs and the legal status of stablecoins. Although SEC Chair Paul Atkins has again urged senators to build a solid legislative framework for the crypto industry, most experts do not expect the bill to be approved by the end of the month.
Overall sentiment across the cryptocurrency market remains negative, and in the coming week most major digital assets may continue to decline or move into a consolidation phase.
