Summary

• Crypto continues to gain institutional momentum as new SEC direction potentially greenlights proof-of-stake yield for ETFs, and JPMorgan allows usage of crypto ETF holdings as collateral, and stablecoin issuer Circle goes public.

• Recent public exchanges between Trump and Elon Musk added some volatility towards the end of the week, though investors remain cautiously optimistic overall in the face of mixed economic data and differing central bank policy signals.

• The U.S. Fed maintains its course despite signs of a slowly cooling economy, flying against the direction of the ECB which made its 8th interest rate cut in the past 13 months, as well as President Trump’s emphatic demands.

Market Overview

Markets ended the week on a bearish note, shaken by the exchange between Trump and Elon Musk on social media. The tensions escalated after Musk called the administration’s flagship tax-and-spending bill (“One Big Beautiful Bill”) fiscally reckless, leading Trump to suggest potential federal contract reviews for Musk’s companies. The headlines triggered a 14% drop in Tesla’s stock, with broader indices also coming under pressure. The S&P 500 returned its gains, finishing largely flat on the week. Bitcoin briefly dipped below US$101k, while Ethereum ended the week down 8%.

U.S. labor market data came in cooler than expected, reinforcing the soft-landing narrative but adding little conviction to risk-on flows. Across the pond, the ECB struck a dovish tone, delivering a widely anticipated interest rate cut - the eighth since June 2024.

Figure 1: Weekly and YTD Performance – Crypto and Global Market Assets

Markets moved cautiously overall as investors weighed a steady stream of macroeconomic data and central bank commentary. In the U.S., inflation showed signs of easing, with core PCE and consumer spending data pointing to a gradual cooling. While not sufficient to trigger immediate Fed action, the data supported the growing soft-landing narrative. Labor market indicators — including JOLTs and initial jobless claims — continued to soften, reinforcing the view that the economy is slowing without tipping into recession.

Both manufacturing and services PMIs came in weaker than expected, signaling broad-based deceleration across sectors. Against this backdrop, Fed Chair Jerome Powell maintained a neutral tone, reiterating the central bank’s data-dependent approach and showing no urgency to shift policy despite continued pressure from President Trump.

Investor sentiment remains cautiously optimistic, with growing confidence in a soft landing tempered by ongoing sensitivity to inflation risks and central bank signals — particularly from a still-hesitant Fed.

1. Digital Assets

Following a decline from US$108K-US$103K that spanned May 29 to 31, Bitcoin remained in consolidation, trading between its local low of US$103K and US$106K, before dipping below US$101K as the Trump-Musk public exchange shook markets. Ethereum, following its major move in early May that took ETH/BTC up 36% from 0.019 to 0.026, seems to be consolidating in its current range between US$2.7K and US$2.3K, ending the week near the bottom of that range.

Figure 2: YTD Indexed Performance – Major Digital Assets

Balances of both BTC and ETH held on exchanges saw notable drops in the first few days of June, marking the notable drops of 4.3% and 7.5% respectively since the start of May. The drop in supply this week marks new yearly lows for total supplies held on exchanges for both assets, possibly a sign of accumulation as longer term buyers move assets off exchanges and into self-custody.

Figure 3: BTC and ETH balance on exchanges hit new yearly lows

Crypto ETFs continue gaining institutional traction

On May 29, the SEC issued pivotal guidance clarifying that staking activities on proof-of-stake networks do not inherently constitute securities transfers. This landmark clarification paves the way for crypto ETF providers to incorporate staking rewards into their offerings, potentially attracting increased interest from institutional investors seeking reliable cash flows. Building on this momentum, on May 31, ETF provider REX Shares filed with the SEC to launch the first Ethereum and Solana staking ETFs.

Further accelerating institutional adoption, JPMorgan announced on June 4 that it will begin allowing clients to use shares in crypto ETFs — such as BlackRock’s iShares Bitcoin Trust — as collateral for loans. Additionally, the bank will start factoring crypto holdings into clients’ net worth and liquid asset assessments, placing digital assets on par with traditional collateral like real estate and vehicles. This development marks a significant step toward mainstream acceptance of crypto within traditional finance.

Figure 4: ETH ETFs see 3 consecutive days of inflows, whilst BTC ETFs see simultaneous outflows

Looking at crypto ETF flows, we observed a notable trend of consecutive net inflows into Ethereum ETFs over three trading days — May 29, 30, and June 2 — while Bitcoin ETFs experienced outflows during the same period. This shift, combined with recent catalysts such as the SEC’s clarifying guidance on staking activities, Sharpink Gaming’s launch of the first publicly traded ETH treasury company, and Ethereum’s impressive price surge relative to Bitcoin in May, signals a potential pivot in investor sentiment. After an extended period of Bitcoin dominance, these developments suggest growing institutional and market interest in Ethereum as the second-largest crypto asset.

Circle raises US$1.05B for its IPO

On Thursday, U.S.-based stablecoin issuer Circle officially announced its IPO on the New York Stock Exchange, marking the most significant crypto IPO since Coinbase’s debut in 2021. The company’s latest valuation stands at approximately US$6.9B, based on more than 220 million outstanding shares detailed in its June 2 filing with the Securities and Exchange Commission.

Circle has made clear that it does not intend to pay dividends to shareholders at this stage. Instead, the firm plans to reinvest all available capital and future earnings to fuel ongoing development and strategic expansion, highlighting a strong commitment to long-term growth.

Adding to its momentum, Circle — issuer of USDC, the world’s second-largest stablecoin — stands to benefit from the recent advancement of the GENIUS Act in Congress. This legislative advancement could provide significant tailwinds, positioning Circle for continued leadership in the evolving digital asset landscape, particularly within the U.S. market.

2. Global Markets

Global markets painted a picture of overarching macroeconomic uncertainty, as investors weigh the effects of a cooling U.S. economy with a Fed that still appears keen to stay the course on its “higher for longer” direction. With the ECB rate cut confirmed however, it seems plausible that a more widespread global easing cycle could be on the horizon.

Figure 5: Multi-Asset Performance – Equities, FX, Commodities, Bonds, Volatility

• Equities: 

The S&P 500 ended the week essentially flat, while the NYFANG Index gained 2.21%, reflecting a cautiously optimistic view to the news of sticky but decreasing inflation, combined with cooling on the U.S. labor.

• FX: 

The DXY fell 0.49% and USD/JPY slipped 0.34%, weighed by softer-than-expected private sector jobs data, and contraction in both the services and manufacturing sectors. 

• Commodities: 

Gold rose 1.36% on weaker-than-expected U.S. economic data. WTI crude ended the week up 3.71%, with ongoing geopolitical tensions and supply concerns raising the risk of potential disruptions to oil exports, despite OPEC+ announcing an increase in supply for July. 

• Bonds: 

The U.S. 10Y Treasury yield dropped more than 9 basis points on news of a slower-than-expected job market and a lower-than-expected level of manufacturing and services activity.

3. Intermarket View

Bitcoin’s correlation with equities continues to hold, with the 2-month BTC–S&P 500 correlation rising to 0.49 from the prior week. Its correlation with gold also edged higher, coming in at 0.09.

Figure 6: BTC 2M Correlation Matrix (vs ETH, S&P 500, Gold, DXY, US 10Y)

Macro Outlook: Economy Softens, Fed Remains Firm

Economic data from the past week paints a picture of a slowly cooling U.S. economy. On Wednesday, payrolls processing firm ADP reported an increase in payrolls for May of just 37,000, well below the Dow Jones forecast of 110,000, marking the lowest monthly job total from the ADP count since March 2023. Applications for unemployment benefits in the form of initial jobless claims rose by 8,000 to 247,000 in the week ending on May 31, exceeding the median forecast of 235,000 retrieved in a Bloomberg survey of economists. 

Concurrent with a softening labor market, the May ISM Manufacturing and Services PMIs both fell short of market expectations, registering at 49.5 and 52 respectively. These readings indicate a modest contraction in the broader U.S. economy, reflecting mounting uncertainty surrounding tariff policies. ISM survey respondents highlighted challenges in forecasting and strategic planning, frequently citing prolonged tariff uncertainty as a key factor driving delays and reductions in ordering activity.

Figure 7: The ISM manufacturing and services PMI both missed market expectations for May, signalling a cooling U.S. economy

Despite signs of a softening U.S. economy, Fed Chairman Powell has reiterated that inflation remains a primary concern, maintaining the central bank’s cautious stance on policy adjustments. The Federal Reserve continues to maintain its cautious approach, emphasizing the need for more comprehensive data before making policy adjustments, citing persistent inflation concerns and the uncertain impact of the recent tariffs.

The Week Ahead

The ECB’s continued interest rate cuts could signal the start of a new global cycle of easing economic conditions. The upcoming release of additional U.S. job and inflation data over the next week should provide greater insight into the current state of the U.S. economy, and Fed’s future actions on whether to implement additional interest rate cuts to combat any potential rise in unemployment. 

Meanwhile in crypto, upcoming events include Blockchain Week Berlin and Proof of Talk which could reveal major developments as the industry seemingly waits for the next big narrative to catch fire.

Figure 8: Key Macro and Crypto Events for the Week of June 6–June 12, 2025