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Crypto prices rose on Monday following last week’s crash, but the bears still appear to be in control.
By Stephen Alpher and Helene Braun
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One factor behind bitcoin and stocks giving up the early-week bounce is investors jittery over Wednesday’s upcoming U.S. Consumer Price Index inflation report.
Economists expect consumer prices to have risen 4.2% in May from a year earlier, up from April’s 3.8% pace.
Charlie Morris, chief investment officer at ByteTree, said investors shouldn’t dismiss the significance of a “4-handle” inflation reading. Citing research by market strategist Russell Napier, Morris noted that periods when inflation rises above 4% have often coincided with trouble for stocks, including the high-inflation 1970s, the lead-up to the 1987 crash and major market downturns in 2000 and 2008.
With the Nasdaq and S&P 500 coming off a record run and crypto already under pressure, another upside inflation surprise could make investors even more cautious about risk assets.
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SpaceX’s (SPCX) highly anticipated IPO on Thursday is drawing overwhelming institutional demand, with orders reportedly exceeding the number of shares available by several multiples.
Large long-only asset managers have dominated the order book, while several investors have reportedly asked for allocations worth more than $10 billion.
The IPO is expected to offer approximately 555.6 million shares at a fixed price of $135 per share, raising around $75 billion and implying a valuation of roughly $1.8 trillion. Up to 30% of the offering could be allocated to retail investors.
The order book is scheduled to close after the market close on Wednesday at 4 p.m. ET, with pricing expected on June 11. Shares are set to begin trading on June 12.
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Higher by more than 1% at the open, the Nasdaq has turned decidedly lower just ahead of the noon hour on the East Coast, now down 1.9% and below its close on Friday.
The S&P 500 is off by 1% and the DJIA is down 0.5%.
Declines are being led by AI favorites like Nvidia, Intel, and Micron, all lower by 2%-4%.
The drop can’t be blamed on Middle East tensions as crude oil is at a session low, down 4% to $87.58 per barrel. Gold and silver are also taking part in the quick dive, each dropping more than 2% over roughly the past hour.
Bitcoin (BTC) is also near its session low at $61,300.
With the AI trade leading losses, bitcoin miners turned AI infrastructure players are all sharply lower. Hut 8 (HUT) is down 6.3%, MARA Holdings (MARA) 4.9%, and IREN (IREN) 8%.
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“If you look at bitcoin vs other assets, from a valuation perspective, it’s cheap,” says Jim Ferraioli, Schwab’s director of crypto research (h/t Eric Balchunas).
Speaking at the Digital Assets Council of Financial Professionals conference, Ferraioli, said investors waiting for a specific catalyst, such as the passage of the Clarity Act, may find it too late.
“There is a fundamental mismatch between the growth of money in the economy and the amount of bitcoin available to buy,” said Ferraioli. “So what we look for when you want to be long crypto is when you expect an expansion of money and liquidity. The U.S. debt is larger than the US economy, and there’s historically one way govts get out of that situation: monetary inflation.”
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Uncorrelated on the way up, perfectly correlated on the way down.
Unable to rally earlier Tuesday as U.S. stocks opened with big gains, bitcoin (BTC) has now turned decisively lower as stocks reverse that advance.
Trading at $61,400, bitcoin is now down 3.8% over the past 24 hours. Ether (ETH), solana (SOL), and XRP (XRP) are down closer to 2.5%. After being up more than 1%, the Nasdaq is now flat on the session.
Among stocks, Strategy (MSTR) is lower by 3.6%, while Coinbase (COIN) slips 0.9%.
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Anthropic is set to publicly launch Mythos AI model today, according to multiple reports. The model gained attention for its reported ability to identify critical vulnerabilities across web browsers and software systems.
This public Mythos will be named Claude Fable 5.
The tool has sparked concerns among banks, cybersecurity professionals and policymakers, who worry that AI capable of finding software vulnerabilities at scale could become a powerful weapon in the wrong hands. Anthropic, however, has said it has been working closely with U.S. government agencies to address those concerns.
The system was initially rolled out in April to a select group of companies, including Google (GOOG), Nvidia (NVDA) and Apple (APPL), through a cybersecurity initiative called Project Glasswing.
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James Butterfill, head of research at CoinShares, said the recent weakness in crypto markets appears to be driven more by investor sentiment than any deterioration in the sector’s underlying fundamentals.
He noted that digital asset investment products have seen $5.8 billion in outflows over the past few weeks, the largest withdrawal of capital in more than a year, but pointed out that the asset class remains roughly flat for 2025.
He attributed the selloff largely to geopolitical uncertainty surrounding the conflict with Iran, which has led markets to scale back expectations for interest rate cuts and instead price in potential rate hikes.
Butterfill also said the artificial intelligence sector continues to attract a disproportionate share of investor capital, drawing liquidity away from crypto and other asset classes as enthusiasm for AI-related investments remains elevated.
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“Wall Street Is Rushing to Fund the AI Bonanza in Every Conceivable Way,” goes the title of an above-the-fold story in the WSJ Tuesday morning.
“Funding rounds and IPOs raising 11-figure sums. Blockbuster bond sales spanning three continents. The casual announcement of an $85 billion equity raise,” writes Sam Goldfarb.
While not mentioning crypto at all, the story surely furthers the notion that it’s the AI boom that is drawing investor interest these days, leaving crypto far behind.
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Crypto prices have returned to familiar territory on Tuesday, headed lower as risk markets across the globe are in rally mode.
Trading at $62,500, bitcoin (BTC) is down 1% over the past 24 hours and lower by nearly 3% from Monday’s high.
Shortly before the U.S. market open, Nasdaq 100 futures are higher by 0.9%, tacking on to yesterday’s 1.5% gain. WTI crude oil is down 2.15% to $89.34 per barrel as investors continue to price in what might be the end of the Iran conflict.
Possibly dragging on bitcoin on Tuesday was a $36 million exploit of the Humanity Protocol and its H token. Bitcoin maxis, however, might say the opposite — that the Humanity attack (and numerous other incidents against other chains in recent weeks) shows why “there is no second best.”
There isn’t much expected in the way of macro news on Tuesday, but May U.S. inflation data is on tap for the U.S. on Wednesday. With interest rate traders now convinced the next Fed move will be a rate hike, a downside surprise could make things interesting.
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Tokenized assets hit a record $28.9B in May; their tenth consecutive monthly all-time high. The stablecoin market cap also extended its run to $320B.
2 hours ago
Tokenized assets hit a record $28.9B in May; their tenth consecutive monthly all-time high. The stablecoin market cap also extended its run to $320B.
Why it matters:
Tokenized assets hit a record $28.9B in May; their tenth consecutive monthly all-time high. The stablecoin market cap also extended its run to $320B.