Market Watch
Things to Watch This Week (May 12 - May 17)
May 13 - U.S. CPI (Apr)
The market will watch Tuesday’s CPI release closely as the Fed signaled it needs more evidence of cooling inflation before considering rate cuts.
Random Musing This Week (May 12 - May 17)
Weekly market recap
Markets digested a mix of macro and regulatory developments this week, with attention focused on the Fed’s policy stance, new trade deals, and mixed signals in crypto legislation.
1. Fed Holds, Flags Tariff-Driven Risks
The Federal Reserve kept interest rates steady at the May FOMC meeting, citing strong labor and resilient domestic demand. However, Chair Powell noted rising risks to inflation and employment due to President Trump’s expanding tariff policy. He attributed the Q1 GDP slowdown largely to a surge in front-loaded imports ahead of anticipated tariff changes, not a sign of weakening fundamentals.
2. U.S.-UK Tariff Deal: First Since Tariff Pause
President Trump announced a new trade agreement with the United Kingdom—the first since the administration’s “reciprocal” tariff pause. The deal includes a tariff cut on British-made autos from 27.5% to 10%, up to 100,000 units annually. It’s seen as a win for U.S. exporters and a sign that bilateral trade deals may return to the forefront.
3. U.S.-China Trade Talks Make Substantial Progress
Over the weekend, the U.S. and China reported substantial progress in their trade negotiations. While most key issues have reportedly been resolved, final details remain undisclosed. Both sides signaled optimism, and markets are awaiting an official announcement, expected Monday evening.
4. Crypto: Federal Delays vs. State-Level Progress
Federal crypto legislation encountered a setback this week, as the GENIUS Act—intended to create a stablecoin regulatory framework—was paused amid scrutiny of a proposed multi-billion dollar deal involving foreign backing and potential conflicts of interest tied to the Trump family. Lawmakers raised concerns over foreign influence and compliance risks, which has stalled progress for now.
Conversely, at the state level, momentum grew. New Hampshire became the first U.S. state to pass a Strategic Bitcoin Reserve law, allowing up to 5% of its state fund to invest in Bitcoin and top-tier digital assets. Arizona followed New Hampshire to become the second U.S. state to enact a crypto reserve bill, enabling the integration of crypto assets into the state’s unclaimed property framework through the establishment of a crypto reserve fund.
Recap of Top Stories (May 5 – May 9)
Interesting
Coinbase to acquire options trading platform Deribit for $2.9B
Commentary: Coinbase, the largest cryptocurrency exchange in the US by trading volume, has agreed to acquire Deribit, one of the world’s biggest crypto derivatives trading platforms. Coinbase Global will acquire Deribit for about $2.9 billion, the exchange announced on May 8.
The acquisition will allow Coinbase to expand into the profitable crypto derivatives market and continue scaling the platform’s global growth, Greg Tusar, Coinbase’s vice president of institutional product, said in the announcement.
US Stablecoin bill blocked as Democrats withdraw support
Commentary: The Guiding and Establishing National Innovation for US Stablecoins of 2025 Act, known as the GENIUS Act, failed to pass cloture in the United States Senate on May 8, dealing a slight blow to cryptocurrency regulation in the country.
To address the concerns of Senate Democrats, the bill had already been amended to include stricter requirements for stablecoin issuers for further provisions for Anti-Money Laundering. The GENIUS Act was seen as a bipartisan effort to increase regulatory clarity for digital assets in the United States. The focus of the bill, stablecoins used for payments, was looked at as extending dollar dominance internationally and straying away from more controversial crypto topics.
Arizona becomes second US state to enact crypto reserve bill
Commentary: Arizona has become the second U.S. state to pass a bitcoin reserve bill into law, following in New Hampshire's footsteps earlier this week. Arizona Governor Katie Hobbs signed House Bill 2749 into law on Wednesday, allowing the establishment of a crypto reserve.
The bill, sponsored by Representative Jeff Weninger, establishes a reserve fund for unclaimed virtual assets that could be tapped for future use pending legislative approval, according to a statement released by Weninger's office. It also allows qualified custodians to stake the reserve assets for rewards or airdrops.
Ethereum’s ‘Pectra’ network upgrade goes live
Commentary: Pectra went live on the Ethereum mainnet at the start of epoch 364032, May 7, 2025, at about 10:00 am UTC. The three main EIPs included are EIP-7702, EIP-7251 and EIP-7691. EIP-7702 allows externally owned accounts to act as smart contracts and cover gas expenses (transaction fees) and payments in tokens that are not Ether.
EIP-7251 increases the validator staking limit from 32 ETH to 2,048 ETH, which makes operations for large stakers easier and simpler. Finally, EIP-7691 increases the number of data blobs per block, which allows for better layer-2 scalability and potentially significantly reduces transaction fees.
New Hampshire governor signs crypto reserve bill into law
Commentary: New Hampshire became the first US state to allow its government to invest in cryptocurrencies, including Bitcoin, after Governor Kelly Ayotte signed a bill passed by the legislature into law.
With the bill's signing into law, New Hampshire becomes the first of several US states considering passing legislation to establish a strategic Bitcoin reserve, including an initiative with the federal government. A similar bill in Arizona passed the state’s House in April. Still, it was vetoed by Governor Katie Hobbs on May 2, and Florida’s government withdrew two crypto reserve bills from consideration on May 3.
Florida indefinitely postpones two strategic bitcoin reserve bills
Commentary: Florida has postponed two bills that would have allowed investment in bitcoin from certain public funds in the state. According to the state legislature's website, on May 3, House Bill 487 and Senate Bill 550 were "indefinitely postponed and withdrawn from consideration."
HB 487, filed in February, aimed to authorize the state's chief financial officer to invest certain public funds in bitcoin. SB 550, also introduced in February, proposed similar measures.
Tether AI platform to support Bitcoin and USDT payments, CEO says
Commentary: Tether AI, the forthcoming artificial intelligence platform from stablecoin giant Tether, will feature payments in major cryptocurrencies, including USDt and Bitcoin. Tether CEO Paolo Adroino took to X on May 5 to tease the imminent launch of Tether AI, the company’s new AI platform designed to offer “personal infinite intelligence.”
According to Ardoino, Tether’s AI platform will be integrated with USDt and Bitcoin payments, allowing users to make transactions directly through a peer-to-peer (P2P) network.
Trump’s crypto dealings face scrutiny as House Republicans unveil digital asset bill
Commentary: US President Donald Trump’s crypto businesses are drawing increased scrutiny on Capitol Hill and beginning to influence the progress of US digital asset legislation. As Republican lawmakers in the US House of Representatives unveiled their draft of a digital asset market structure bill on May 5, Democrats prepared for a united response to Donald Trump’s deepening connections with the industry.
Rep. Hill and three top Republicans unveiled the draft bill, which could clarify the treatment of digital assets by the US’s financial regulators: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Hill and others echoed some of Trump’s talking points on crypto - e.g, making the US a “crypto capital of the world” - suggesting deference to the president’s previously announced policies.
SEC delays decision on whether to greenlight Canary's Litecoin ETF and asks for public comments
Commentary: The U.S. Securities and Exchange Commission has delayed a proposal from Canary Funds to list and trade a spot Litecoin exchange-traded fund and is asking for public input. The agency is asking for public comments, according to a filing released on Monday.
"In particular, the Commission seeks comment on whether the proposal to list and trade Shares of the Trust, which would hold LTC, is designed to prevent fraudulent and manipulative acts and practices or raises any new or novel concerns not previously contemplated by the Commission," the agency said.
Upcoming Market Events
May 13 - U.S. CPI (Apr)
May 15 - U.S. Retail Sales (Apr)
May 30 - BTC CME May (BTCK25) Options Expiry
June 18 - U.S. FOMC Interest Rate Decision