Volatility Rattles Crypto Markets Ahead of U.S. Inflation Report

What began as a wave of optimism after the U.S.–China trade deal has morphed into tension across the crypto space. Now, all eyes are on incoming inflation data from the U.S.—and the market is anything but calm.

• The U.S. stock market posted a solid gain of over 3% following the announcement of new trade agreements. 
• Commodities such as oil and gold also closed higher, though such rallies are typically associated with periods of economic uncertainty.
• Meanwhile, spot bitcoin ETFs in the U.S. saw a notable slowdown, registering a net inflow of just $5.2 million on May 12, 2025.
• The iShares Bitcoin Trust ETF (IBIT) by BlackRock stood out as the sole positive contributor, recording $69.4 million in net inflows and effectively sustaining overall growth in the segment.

This week’s macroeconomic reports are likely to dictate short-term momentum in the crypto markets.

Retail indicators suggest sustained confidence:

• Fear & Greed Index stays elevated at 71 (“Greed”),
• Bitcoin dominance falls further to 61.9%,
• The Altseason Index rises to 35, hinting at rotation into altcoins.

Crypto Recalibrates After the Drop

The altcoin drop was a reaction to Bitcoin’s correction, though short-term recovery signs are emerging. Key support now sits at $3.3 trillion in total market cap—holding above this level may confirm trend continuation. A failure to reclaim it could result in a broader 4–8% decline.

Heightened volatility swept through the crypto market, triggering over $610 million in futures liquidations.

• Nearly $500 million came from long traders,
• BTC and ETH positions were most affected, with $290.7 million in combined liquidations,
• XRP followed, with $33.2 million in losses from liquidated positions.

Inflation Data Could Be a Market Mover

Crypto, stocks, and other risk-on assets are poised at a crossroads, waiting on inflation data that could tip the scales. With the Fed’s next rate move still uncertain, this week’s numbers might offer the clearest signal yet of what’s to come.

With inflation still running hot, the prospect of rate relief is virtually off the table. That makes weak inflation numbers bad news not just for traditional markets, but for crypto, too.

With inflation projected to stay on target at 2.4%, markets are cautiously optimistic. However, Trump’s protectionist trade agenda—built around aggressive tariffs—has reignited expectations of mid-term inflationary pressure. It’s this outlook that likely prompted Jerome Powell to maintain a more measured stance on interest rate cuts.

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The broader market remains upbeat and is gradually incorporating digital assets into its structure.

A prime example: Coinbase was officially added to the S&P 500 today—a watershed moment for the exchange and a historic first for the crypto sector. This inclusion not only validates Coinbase’s growth but also signals a shift in how traditional markets are embracing blockchain-native firms.