Summary

• Corporate interest in digital assets continued to build, with BTC leading new treasury allocations and ETH now joining SOL among listed company balance sheets.

• Short-term sentiment improved on stronger U.S. consumer confidence and trade truce announcements, though market reaction remained mixed amid persistent policy uncertainty.

• Macro signals remain divided: Federal Open Market Committee (FOMC) minutes reinforced the Fed’s cautious stance, while weaker Q1 U.S. GDP, rising bond yields and the House passage of a major U.S. tax bill weighed on the long-term fiscal outlook.

  

Market Overview

Markets were mixed this week, driven by conflicting macro and policy signals. Crypto gave back some recent momentum, with BTC consolidating after strong multi-week rallies, likely reflecting profit-taking and broader capital rotation. Other digital assets also softened — Ethereum ended the week down 1%.

Meanwhile, global equities posted modest gains. Early support came from the U.S.–EU trade truce, easing trade tensions. A U.S. trade court also initially blocked Trump-era tariffs, including the 10% baseline and country-specific levies, though the decision was subsequently overturned, and the situation remains fluid. Despite these crosscurrents, major global indices turned positive year-to-date for the first time in months (S&P 500 +1.2% YTD).

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

While markets still point to a broader rotation into risk assets, caution persists as long-term U.S. bond yields climb, driven by renewed concerns over rising debt levels and upcoming tax proposals. Policy uncertainty around tariffs, inflation, and fiscal imbalances continues to fuel volatility. Markets remain fixated on two key themes: the evolving tariff narrative and the broader policy framework around deficits, debt, and interest rates. Central to the narrative this week are the newly advanced U.S. tax bill, the recent tariff court ruling, and the May FOMC meeting minutes, which reflected a cautious Fed and highlighted the risk of “difficult tradeoffs” if inflation reaccelerates.

1. Digital Assets

After trading largely within a narrow range (US$107K–110K), Bitcoin consolidated following its all-time highs, ending the week down 5%. The pullback was mainly driven by profit-taking, alongside some rotation into other majors like ETH and BNB, which posted smaller weekly declines. Altcoins briefly broke above their early March highs before retracing.

Figure 2: YTD Indexed Performance – Major Digital Assets

Exchange-traded product flows remained largely strong, with spot Bitcoin ETFs recording ten consecutive days of net inflows, even as market narratives shifted from 'digital gold' to broader risk-on positioning. The trend reversed on May 29 with their first day of net outflows, coinciding with BTC’s pullback. Historically, similar inflow streaks have signaled strong underlying demand during previous BTC cycle peaks.

Figure 3: Spot BTC ETFs have seen 10 days straight of inflows

Corporate Treasury Adoption Accelerates

A new source of buying pressure for BTC continues to gain traction: public companies adopting Bitcoin and other digital assets as part of their corporate treasury strategy. Multiple firms globally are adopting Bitcoin as a treasury asset, diversifying reserves to hedge against economic uncertainty and boost capital efficiency. Bitwise projects over 1M BTC could be held in corporate treasuries by 2026.

Currently, 117 listed companies hold more than 800,000 BTC combined. Recent adopters include Twenty One, Nakamoto, GameStop, and even Paris Saint-Germain F.C., following the blueprint set by Strategy and its co-founder Michael Saylor. On May 28, Trump Media & Technology Group joined the trend, launching a US$2.5B BTC treasury strategy backed by 50 institutional investors.

Figure 4: Public Company Bitcoin Holdings Now Exceed Over 800K BTC

This trend is also expanding beyond Bitcoin. SharpLink recently unveiled a US$425M Ethereum treasury initiative, advised by Consensys CEO and Ethereum co-founder Joseph Lubin. Institutional adoption trends suggest digital assets are becoming a more prominent component of corporate treasury strategies for many firms.

However, such adoption strategies can also carry certain structural risks. Many of these firms trade at valuations tied to their digital asset exposure — often at significant premiums that reflect either leverage, early-mover positioning, or public market access to BTC. As more companies follow suit, these premiums are beginning to compress, and equity performance is increasingly decoupling from the underlying asset’s movements. The risks are most pronounced among newer entrants, where governance, risk controls, or long-term treasury planning may be less mature — raising concerns about sustainability, especially during periods of market stress or when external funding is needed.

2. Global Markets

Global markets reflected the push-pull between easing trade tensions and mounting fiscal risks. Equities edged higher, resulting in a rare equity-bond divergence: “good news for stocks, bad news for bonds.” While equity indices climbed, bond markets remained choppy and fixed-income volatility rose — an unusual decoupling that highlights underlying uncertainty.

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

• Equities: 

The S&P 500 rose 1.21%, while the NYFANG Index gained 2.20%. The week’s performance was supported by a pickup in consumer confidence, temporary relief on trade policy, and strong earnings from AI leader Nvidia.

• FX: 

The U.S. dollar edged lower, with the DXY down 0.47% and USD/JPY slipping 0.08%, weighed by ongoing U.S. fiscal debates and FOMC minutes that signaled a continued cautious stance.

• Commodities: 

Gold held steady amid yield concerns, while WTI crude edged lower on U.S. sanctions news.

• Bonds: 

The U.S. Treasury yield curve steepened further, with the 10Y yield rising again. Similar moves were seen globally, including in Japan, where 10Y yields also climbed. The broad rise reflects investor concerns over fiscal deficits — driven by the U.S. tax bill and credit outlook — alongside renewed central bank tightening expectations.

3. Intermarket View

Bitcoin’s correlation with equities remained elevated, with the 2-month BTC–S&P 500 correlation holding above 0.45. In contrast, its correlation with traditional hedges like gold stayed flat, marking a clear divergence from early May dynamics.

Cross-asset flows reinforced this pattern: equity and crypto ETFs — particularly Bitcoin and ETH ETPs — largely attracted net inflows in this period, while gold ETFs recorded consecutive weeks of outflows. In this backdrop, while Bitcoin remains tightly aligned with tech and momentum stocks, that relationship could be tested if bond yields climb further or if macro sentiment weakens.

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

Macro Outlook: Sentiment, Growth, and Policy in Flux

Recent data continues to reflect a mixed macro backdrop. On the one hand, U.S. consumer confidence rebounded sharply in May, rising to 98 from 85.7 in April — its first increase after five straight months of decline. The improvement was supported by brighter expectations for business conditions, employment, and income, further aided by easing trade tensions following recent U.S.–China and U.S.–EU truce announcements.

Figure 7: U.S. consumer confidence rebounds after five straight months of decline

However, recent hard data highlights that underlying growth momentum remains fragile. First-quarter U.S. GDP contracted at a 0.2% annualized pace, with weakness in consumer spending and a larger drag from trade flows weighing on activity. While confidence reflects forward-looking sentiment, the weaker Q1 GDP print underscores the economic headwinds already in place, particularly as trade policies continue to evolve.

At the same time, fiscal concerns remain elevated. A newly advanced U.S. tax bill, which recently passed the House and now heads to the Senate, is projected to add an estimated US$4T to the national debt over the next decade — a development that has added to market concerns over fiscal sustainability.

Adding to the uncertainty are persistent inflation concerns and fading hopes for near-term rate cuts. Minutes from the May 6–7 FOMC meeting revealed concerns over tariff-driven inflation risks, with members warning of “difficult trade-offs” if price pressures reaccelerate. The Fed held rates steady at 4.25%–4.50% for a third consecutive meeting and reiterated a cautious, wait-and-see stance.

Market expectations for rate cuts have also shifted dramatically. In early May, four cuts were priced in for 2025; that figure has now fallen to fewer than two. This repricing reflects a series of cautious signals from Fed officials, sticky core service inflation, resilient labor markets, and continued policy uncertainty around both trade and fiscal developments.

Figure 8: Expectations for Fed Rate Cuts Fall Below Two This Year

While headline trade tensions have eased, tariff levels remain above pre-April levels. Given the typical lag in import data, recent economic releases may not yet fully capture the effects of ongoing trade restrictions. CPI readings in the coming months could still reflect additional upward pressure, as the inflationary effects of tariffs often peak two quarters after implementation. This dynamic helps explain why the Fed remains cautious even as headline GDP and inflation readings soften. A clearer picture of the rate path is likely to emerge only after price data from June onward becomes available.

The Week Ahead

Markets begin June with trade tensions easing but policy uncertainty remaining elevated. Attention turns to a wave of key U.S. data, including April PCE inflation, personal income, and spending figures on May 30, which will set the tone for inflation expectations ahead of the Fed’s June meeting. ISM Manufacturing and Services PMIs (June 2 and 4) will offer further insight into the health of the U.S. economy.

Fed Chair Powell is expected to speak on June 2, and markets will closely monitor his remarks for signals on rate path clarity. Meanwhile, the ECB’s interest rate decision on June 5 will be a focal point for European markets, with investors assessing whether rate cuts are in play amid softening growth.

In crypto, Bitcoin Seoul 2025 (June 4) is expected to feature key ecosystem updates and institutional engagement themes. This follows the conclusion of Bitcoin 2025 in Las Vegas (May 27–29), which centered on long-term adoption and regulatory clarity.

Figure 9: Key Macro and Crypto Events for the Week of May 30–June 5, 2025