Gate Ventures This Week's Cryptocurrency Market Update (May 25, 2026)

Summary

• The U.S. stock market experienced a clear rotation of funds, shifting from technology stocks to defensive value stocks. The Dow Jones Industrial Average surged 2.22%, supported by a resilient labor market, with initial unemployment claims falling to 215k.

• The Composite Purchasing Managers’ Index (PMI) preliminary reading rose to a two-year high of 54.4, but ongoing input cost pressures and a complex macroeconomic background remain. Meanwhile, higher mortgage rates continued to weigh on building permits, which fell to their lowest level since early last year.

• The Federal Open Market Committee (FOMC) minutes revealed a shift in monetary policy framework under Kevin Woor, introducing a new approach that explicitly links accelerated quantitative tightening with potential rate cuts.

• HYPE soared 34.6%, driven by continuous expansion of the Hyperliquid ecosystem, improved USDC liquidity, ongoing protocol buybacks, and increasing institutional participation.

• ZEC increased 23.4%, buoyed by optimistic sentiment following Grayscale’s application for a spot ETF, and the U.S. Securities and Exchange Commission (SEC)’s official closure of its investigation into the Zcash Foundation, easing regulatory pressure.

• Reports indicate Polymarket is exploring entry into the Japanese market, while facing ongoing regulatory scrutiny worldwide.

• Kraken, after receiving regulatory approval from Dubai’s Virtual Asset Regulatory Authority (VARA), is accelerating its expansion into the UAE market.

• Kalshi has expanded its current funding round by an additional $200 million, with Baillie Gifford and Layer Global participating.

Macro Overview

Value stock rotation accelerates, Woor leads Fed policy shift, inflation pressures remain high

Last week, major U.S. stock indices posted overall gains, with a notable sector rotation. The Dow Jones Industrial Average outperformed significantly, rising 2.22%. The S&P 500’s gains were more modest at 0.79%, while the tech-heavy Nasdaq Composite barely moved, up only 0.21%. This divergence clearly indicates a shift of capital from high-valuation growth stocks to value stocks. Investors are actively adjusting portfolios to cope with ongoing geopolitical uncertainties and high interest rates. Defensive sectors are favored, with reduced holdings in large-cap tech stocks, aiming to hold assets with stable profits and reasonable valuations to hedge against macroeconomic shocks.

The S&P Global U.S. Composite PMI for May unexpectedly rose to 54.4 from 51.3 in April, marking the fastest economic expansion in over two years. The increase was mainly driven by the services PMI rising to 54.8, while manufacturing PMI remained at 50.9. However, the report also highlighted persistent cost pressures, with input price sub-indices climbing further. Meanwhile, the Philadelphia Fed Manufacturing Index dropped sharply from 15.5 in April to 4.5 in May, indicating some softening in regional economic outlook. Overall, these indicators present a complex macroeconomic picture — strong overall demand supports continued economic growth, but sticky price components increase the risk of sustained inflation.

Initial jobless claims for the week, seasonally adjusted, decreased by 8,000 to 215k, beating market expectations of 220k. Continuing claims remained stable at 1.79 million, indicating a relatively quick re-employment pace. The low level of layoffs further confirms a highly resilient labor market, with no signs of loosening even in a high-rate environment. For the Fed, sustained strong employment data provides ample economic buffer to maintain a tightening stance. With no signs of a labor market breakdown or recession, policymakers can focus fully on containing stubborn inflation pressures.

Higher mortgage rates continue to weigh heavily on the housing sector, with April’s new housing starts and building permits both weak. After a sharp decline in March, new starts rebounded slightly by 5.7% to an annualized rate of 1.36 million units, still below last year’s levels. Permits fell 3.0% to an annualized rate of 1.44 million, the lowest since early last year. These data suggest that high financing costs and ongoing inventory accumulation are causing builders to slow new projects. The weak housing data clearly demonstrate the effectiveness of monetary policy transmission — high interest rates are successfully cooling off capital-intensive sectors.

The latest FOMC minutes revealed a major structural shift in the monetary policy framework under new Chair Kevin Woor. The discussion focused on a bold new policy approach — actively adjusting the pace of quantitative tightening (QT) to pave the way for eventual rate cuts. Woor believes that managing the balance sheet proactively can give the Fed greater policy flexibility, lowering financing costs without reigniting inflation. However, the minutes also emphasized that given the stickiness of some inflation components, market participants should remain patient. By explicitly linking balance sheet normalization with interest rate policy, the Fed has introduced a sophisticated macro policy framework that will fundamentally reshape market expectations of traditional policy paths.

Next week’s economic calendar centers on the April core Personal Consumption Expenditures (PCE) price index — the Fed’s preferred inflation gauge. Investors will analyze this alongside the second estimate of Q1 GDP released on Thursday to assess the evolving stagflation risk. Additionally, the Fed’s Beige Book on Wednesday will provide qualitative insights into regional responses to supply chain pressures and ongoing wage increases. Coupled with recent housing and consumer confidence data, these key indicators will largely determine whether policymakers will consider rate hikes later this year. (1)

DXY

The U.S. dollar index performed strongly last week, closing nearly unchanged at 99.32 from 99.28. This stability reflects a delicate macroeconomic balance — ongoing geopolitical conflicts remain unresolved, boosting safe-haven demand for the dollar, which offsets regional manufacturing weakness and keeps the dollar anchored in a high consolidation zone. (2)

US 10-Year and 30-Year Bond Yields

U.S. Treasury yields declined slightly last week, with the 10-year yield falling from 4.60% to 4.56%, and the 30-year yield dropping from 5.13% to 5.06%. The modest rebound in bond prices reflects classic safe-haven capital flows — investors are heavily buying government bonds to hedge against escalating geopolitical risks in the Middle East. (3)

Gold

Gold prices edged lower last week, retreating from $4,563 to $4,521, a decline of 0.92%. This downward movement indicates that elevated real yields continue to suppress precious metals. The strong downward pressure from tightening monetary policy ultimately overwhelmed the support from geopolitical risk premiums and safe-haven buying. (4)

Cryptocurrency Market Overview

Mainstream Assets

BTC Price

ETH Price

ETH/BTC Ratio

Last week, Bitcoin (BTC) remained relatively stable, slipping only 0.5%, while Ethereum (ETH) declined 1.6%. The ETH/BTC ratio also decreased slightly by 1%. Spot Bitcoin ETF experienced net outflows of $1.26 billion this week, marking the third-largest weekly outflow in Bitcoin ETF history; spot ETH ETF saw net outflows of $216 million. (5) Market sentiment remains weak, with the Fear & Greed Index holding at “Fear,” at 30. (6)

Total Market Cap

Crypto Total Marketcap

Crypto Total Marketcap Excluding BTC and ETH

Crypto Total Marketcap Excluding Top 10 Dominance

The total cryptocurrency market cap remained essentially flat, down only 0.4%. Excluding BTC and ETH, the market declined 0.6%; however, the broader altcoin market performed relatively well, with a 4.2% increase in market cap after removing the top ten assets. (7)

STRC Performance

Last week, STRC recorded $728 million in trading volume, all below face value.

Since the ex-dividend date on May 15, STRC has continued trading below face value, reflecting profit-taking after the dividend payout and the end of dividend arbitrage demand. (8)

Within the Strategy suite of financial instruments, STRC accounts for 77% of total trading volume, down from 93% last week. The second-largest is SATA (Strategy Floating Rate Perpetual Preferred Stock), with 14.7%. (7)

Top 30 Crypto Assets Performance

Source: CoinMarketCap and Gate Ventures, as of May 25, 2026

Among the top 30 assets, prices declined on average by 0.6%, with HYPE and ZEC showing notable gains.

HYPE surged 34.6% last week, supported by the ongoing expansion of the Hyperliquid ecosystem. USDC supply on the network surpassed $4.11 billion, further deepening liquidity for trading, collateral, and settlement activities. (8)

Market sentiment was also boosted by Hyperliquid’s support fund mechanism — which continuously reinvests a large portion of protocol trading fees into HYPE buybacks, reinforcing the token’s reflexive demand dynamics.

This rally was further driven by increased institutional attention, including ETF exposure from Bitwise and 21Shares, as well as deep integration of USDC infrastructure by Circle and Coinbase. (9)

ZEC rose 23.4% last week, mainly driven by optimistic sentiment following Grayscale’s application to convert its existing Zcash trust into a spot ETF — potentially the first privacy coin spot ETF in the U.S.

Market sentiment was also lifted by the SEC’s recent closure of its long-standing investigation into Zcash Foundation, significantly reducing regulatory uncertainty for ZEC and privacy assets. (10)

Key Developments in the Crypto Industry

Polymarket Seeks Japan Expansion Amid Rising Global Regulatory Pressure

Reports indicate Polymarket is preparing to enter the Japanese market, aiming for regulatory approval before 2030, despite Japan’s strict restrictions on online gambling and increasing global regulatory scrutiny of prediction markets. The company has appointed Mike Eidlin, head of Jupiter Japan, to lead local expansion, citing strong spontaneous demand from Japanese and broader Asian user bases — their Japan-specific X account has surpassed 53k followers. (11)

U.S. Lawmakers Introduce PARITY Act to Review Crypto Tax Relief

U.S. bipartisan lawmakers have introduced the PARITY Act, requesting the Treasury Department and IRS to study potential minimum tax exemption thresholds for small crypto transactions, with a 180-day window for transitional guidance. The bill does not immediately establish exemptions but aims to evaluate reporting compliance burdens, small transaction scales, stablecoin tax treatment, broker safe harbor provisions, and potential wash sale rules for digital assets. This proposal reflects a legislative trend toward modernizing crypto tax rules, aligning with industry calls for tax relief on low-value transactions and clear tax treatment for payment stablecoins. (12)

Kraken Gains Dubai VARA Approval, Accelerating UAE Market Entry

Kraken’s parent company, Payward, received preliminary approval from Dubai’s Virtual Asset Regulatory Authority (VARA), granting licenses for brokerage trading, investment, and management services, laying the groundwork for its full entry into the UAE market. Planned services include AED deposits, margin trading, OTC services, and Kraken Prime for institutional clients. This approval further consolidates Dubai’s position as a global crypto hub, with VARA’s clear regulatory framework attracting major exchanges and institutional liquidity. (13)

Major Venture Capital Deals

Kalshi Raises an Additional $200 Million, with Baillie Gifford and Layer Global Participating

Prediction market platform Kalshi secured an extra $200 million in funding from Baillie Gifford and Layer Global, expanding its previous $1 billion Series F round led by Coatue. The round maintains Kalshi’s valuation at $22 billion, with monthly trading volume surpassing $14 billion and annualized revenue exceeding $1.5 billion. (14)

Variational Completes $50 Million Series A to Bring Traditional Finance Liquidity On-Chain

On-chain derivatives protocol Variational closed a $50 million Series A led by Dragonfly Capital, with Bain Capital Crypto and Coinbase Ventures participating. The company plans to expand its real-world asset (RWA) perpetual contract infrastructure covering gold, silver, copper, and crude oil, while scaling its RFQ-based liquidity model — aggregating quotes from traditional traders and major exchanges to replace isolated crypto order books. (15)

AEON Completes $8 Million Pre-Seed Round Led by YZi Labs to Build AI Agent Settlement Infrastructure

AEON raised $8 million in pre-seed funding led by YZi Labs, with participation from IDG Capital, HashKey Capital, and Stanford Blockchain Builders Fund. The company aims to develop native payment and settlement layers for autonomous AI agents, deploying infrastructure on BNB Chain’s x402 platform to support transactions between agents and merchants. AEON states its payment network has connected AI agents with over 50 million offline merchants worldwide. (16)

Venture Market Data

Last week, 24 funding deals closed, including 12 in infrastructure, 6 in DeFi, and 6 in social sectors.

Weekly Venture Deal Summary, Source: Cryptorank and Gate Ventures, as of May 25, 2026

Total disclosed funding reached $532.6 million last week, with social sector leading at $226.9 million. The largest single deal was Kalshi’s $200 million raise.

Weekly Venture Deal Summary, Source: Cryptorank and Gate Ventures, as of May 25, 2026

In the fourth week of May 2026, weekly crypto industry funding declined sharply by 52% to $532.6 million compared to the previous week.