Major cryptocurrencies exhibited a lack of bullish momentum on Monday, even as positive sentiment surrounding U.S.-China trade talks propelled Asian stock markets upwards.
Bitcoin (BTC), the leading cryptocurrency by market capitalization, hovered near $105,650, showing little movement after forming a doji candle over the weekend, indicative of market indecision, as per data from TradingView.
Recent statistics from Blockchain.com highlighted a significant slowdown in network activity, with the seven-day moving average of daily on-chain transactions dropping to 315.48K, marking the lowest level in at least a year.
XRP, a cryptocurrency focused on payments, struggled to gain upward momentum despite breaking a bearish trendline that had persisted since mid-May. At the time of writing, XRP was trading at $2.24, down over 1% on the day (UTC). The upcoming APEX 2025 conference for XRP Ledger in Singapore may lead to increased volatility this week.
Meme-based cryptocurrency Dogecoin (DOGE) also faced a decline, trading nearly 2% lower, approaching 18 cents, having failed to secure a position above the 100-day simple moving average (SMA) during the weekend.
Hang Seng Index Reaches New Heights
In contrast, Hong Kong’s Hang Seng index climbed 1.3%, surpassing the 24,000 mark for the first time since March 24, fueled by optimism regarding the ongoing U.S.-China trade negotiations.
ForexLive’s Chief Currency Analyst, Adam Button, noted, “Optimism is as high as it’s been since Trump’s election as top trade deputies will meet in London starting on Monday. There are indications that talks will last all week, and Trump himself is optimistic.”
President Donald Trump expressed similar sentiments on Truth Social, predicting a productive meeting and announcing the renewed round of trade discussions in London.
Other Asian indices, including South Korea’s KOSPI and China’s Shanghai Composite, also registered gains, despite the concerning backdrop of deepening consumer and factory deflation in China.
China’s Deflation Concerns Deepen
Data released by the National Bureau of Statistics indicated that China’s consumer prices fell by 0.1% year-over-year in May, a continuation of negative inflation which first emerged in February this year.
Additionally, the producer price index, which reflects factory gate prices, dropped by 3.3% year-over-year, surpassing analysts’ expectations of a 3.2% decrease. This deflationary trend has persisted since October 2022.
Robin Brooks, a senior fellow in the Global Economy and Development program at the Brookings Institution, attributed the source of this deflation to U.S. tariffs, stating, “U.S. tariffs are now the catalyst for pushing China into full-on deflation due to weak consumption and a debt overhang.” He highlighted that producer price inflation for consumer goods is now at its lowest level since the 2008 financial crisis.
Given these economic indicators, it is possible that the Chinese government may introduce additional measures to stimulate domestic demand without further liquidity easing.
In May, China’s central bank cut key interest rates by 10 basis points to a historic low and reduced the reserve requirement ratio, easing liquidity in the market. Reports from the state-run China Securities Journal suggest that further reductions in the reserve requirement ratio may be forthcoming to bolster growth.
Such stimulus measures could be favorable for financial markets, including cryptocurrencies.
Upcoming U.S. CPI Data in Focus
The upcoming Consumer Price Index (CPI) report for the U.S. in May, set to be released on Wednesday, will be closely monitored for indications of how Trump’s tariffs are affecting inflationary pressures within the economy.
The headline CPI is anticipated to echo April’s month-on-month growth rate of 0.2%, equating to a projected annual increase of 2.5%, slightly above April’s 2.3% rate. Core inflation, which excludes the more volatile food and energy sectors, is expected to rise to 2.9% in May from April’s 2.8%.
Economists at Barclays have projected that this report may reveal the initial impacts of tariff-related price increases across a wide range of core goods. A stronger-than-expected inflation reading could jeopardize the Federal Reserve’s rate cut strategy, potentially triggering increased volatility in financial markets.
