The sector remains under pressure from long-term negative factors, including geopolitical and trade instability, as well as the likelihood of a prolonged period of unchanged U.S. Federal Reserve monetary policy. The situation in the Middle East shows no clear signs of improvement: although U.S.–Iran negotiations on a nuclear deal have made some progress, an agreement remains distant, while the White House continues to build up its military presence around the Islamic republic. U.S. President Donald Trump stated that he would allow 10–15 days to conclude consultations, after which alternative options for resolving the conflict would be considered. As a result, the risk of escalation persists, which could drive energy prices higher and significantly slow global economic growth. Under these conditions, investors continue to favor safe-haven assets—primarily gold—since digital currencies are still not widely viewed as a reliable store of value. Meanwhile, the U.S. dollar is receiving support from expectations of a pause in further monetary policy adjustments by the Federal Reserve. January data confirmed labor market stability, showing a decline in unemployment to 4.3% and an increase in employment by 130,000, alongside slowing inflation (headline CPI at 2.4% and core CPI at 2.5% year-on-year), which nevertheless remains above the regulator’s 2.0% target. Minutes from the latest meeting highlighted a lack of consensus among policymakers on the current situation, although most expressed concern that the pace of disinflation could be slower and more uneven than previously expected, with significant risks of inflation becoming entrenched above the target.
Overall, experts do not expect a resumption of positive momentum in the cryptocurrency market, noting that “digital gold” may be heading for its worst first quarter in eight years. Since the beginning of the year, the token has already lost more than 23.0% of its value, setting an anti-record, as it has never before posted substantial losses for two consecutive months, although significant weakness was observed in January 2015, 2016, and 2018. Broader sentiment across the industry also remains negative: the Crypto Fear & Greed Index is deep in “extreme fear” territory at a reading of 9.
Among the positive developments this week, progress in discussions around the Crypto Market Structure bill (CLARITY) stands out. The initiative aims to clarify which digital assets fall under securities law and which should be overseen by the U.S. Commodity Futures Trading Commission. On Thursday, representatives of the U.S. administration urged bankers to allow limited rewards in stablecoins that would not threaten their traditional financial businesses, while Ripple CEO Brad Garlinghouse stated that he is now 90.0% confident that CLARITY will be adopted by the end of April.
Overall, sentiment in the sector remains mixed, and next week most digital assets may continue to decline or move into a consolidation phase.
