Major cryptocurrencies struggled for momentum on Monday, even as Asian stock markets rallied on renewed hope for progress in U.S.-China trade talks.
Hang Seng Breaks Above 24,000 for First Time Since March
Hong Kong’s Hang Seng Index rose 1.3%, surpassing the 24,000 mark for the first time since March 24, driven by optimism surrounding the latest round of trade negotiations between the U.S. and China.
“Optimism is at its highest since 2016, with top trade officials meeting in London this week,” analysts noted.
Other Asian indices such as KOSPI and the Shanghai Composite also registered gains, despite deepening deflation concerns in China.
China Faces Rising Deflation Risks
China’s consumer price index (CPI) declined 0.1% year-over-year in May, continuing the negative trend seen since February. More notably, the producer price index (PPI) dropped 3.3% year-over-year, a sharper fall than the expected 3.2%. This marks continued factory gate deflation since October 2022.
“China’s economy faces all conditions for deflation: weak consumption, debt overhang, and external tariff pressure,” experts warned.
In response, the People’s Bank of China cut key interest rates by 10 basis points in May and lowered the reserve requirement ratio, releasing more liquidity into the market. Further easing is expected later this year to combat economic stagnation.
Bitcoin Lacks Direction Despite Market Optimism
Bitcoin traded flat-to-negative near $105,650, showing no strong bullish momentum. A doji candle formed on Sunday’s chart indicated market indecision, and on-chain transaction activity hit a yearly low at 315,480 daily transactions, according to seven-day moving averages.
“Bitcoin failed to capitalize on positive global market sentiment,” data shows.
XRP and DOGE also showed weakness, with XRP dropping over 1% and DOGE nearly 2% as they struggled against technical resistance levels.
U.S. Inflation Data in Focus
The U.S. Consumer Price Index (CPI) for May, due Wednesday, is expected to reflect tariff-driven inflation. Forecasts suggest headline CPI will rise 0.2% month-on-month, resulting in a 2.5% annualized increase, while core inflation could tick up to 2.9% from April’s 2.8%.
“A hotter-than-expected inflation print could reduce odds of Fed rate cuts and inject volatility into risk markets,” economists warn.
This week’s inflation report could significantly influence global equities and crypto assets depending on its outcome.