The cryptocurrency market is navigating a complex web of macroeconomic pressures as traders weigh the potential impact of renewed trade tensions, upcoming U.S. inflation data, and pivotal testimony from Federal Reserve Chairman Jerome Powell. Despite these headwinds, major digital assets displayed relative stability. Bitcoin (BTC) saw a modest decline, trading around $107,717, down approximately 1.9% over the last 24 hours. The flagship cryptocurrency traded within a tight range, with a 24-hour high of $109,953 and a low of $107,267, indicating a period of consolidation. Ethereum (ETH) experienced a more pronounced dip, falling about 4% to trade near $2,492. The ETH/BTC pair also showed weakness, dropping 1.9% to 0.02326, suggesting that capital is favoring Bitcoin amidst the uncertainty. The broader market sentiment remains cautious, with overall trading volumes appearing subdued as market participants await clearer directional signals from legacy financial markets.

Macro Catalysts: Powell's Testimony and PCE Inflation Data

The week ahead is dominated by two significant events that could inject volatility into both crypto and traditional markets. All eyes will be on Federal Reserve Chairman Jerome Powell's semi-annual monetary policy testimony before Congress. Traders will be scrutinizing his language for any hints regarding the future path of interest rates. The market is currently pricing in potential rate cuts later this year, a sentiment echoed by Fed Governor Christopher Waller's recent comments suggesting a reduction could be considered as early as July. According to Chris Weston, head of research at Pepperstone, emerging weakness in the labor and housing markets could prompt the Fed to adopt a more dovish stance, potentially guiding for a cut in September. Such a move would likely be bullish for risk assets like Bitcoin, which has managed to hold critical support above the $100,000 level despite recent geopolitical flare-ups.

Adding to the suspense is the release of the core Personal Consumption Expenditures (PCE) price index, the Fed's preferred measure of inflation. The consensus forecast is for a mild 0.1% month-on-month increase, which would support the case for rate cuts. However, analysts at ING caution that this benign outlook could be temporary. They note that the inflationary impact of potential U.S. tariffs has not yet been factored into the data and could surface from July onwards. The investment bank maintains a more hawkish view, predicting just one 50 basis point rate cut this year, likely in December, once the effects of the trade policies become clearer. A higher-than-expected PCE reading could dampen rate cut hopes and apply downward pressure on BTC and other cryptocurrencies.

Crypto Stocks and AI Narratives Show Divergence

While the core crypto market remained relatively placid, crypto-related equities experienced significant turbulence. Coinbase (COIN) stock fell 6%, and Circle (CRCL) saw a sharp 16% decline. This divergence highlights how equity investors may be pricing in regulatory and business-specific risks more aggressively than spot crypto traders. The Bitcoin mining sector presented a mixed picture. While Hut 8 (HUT) dropped 6.5%, Core Scientific (CORZ) held steady after a massive 30% surge on Thursday. The rally in CORZ was fueled by reports of a potential acquisition by AI cloud provider CoreWeave, underscoring the powerful and growing narrative connecting Bitcoin mining infrastructure with the high-performance computing needs of the artificial intelligence industry. This potential M&A activity offers a unique bullish catalyst for specific mining stocks, decoupling their performance from the day-to-day price action of BTC.

Looking at altcoins, performance was varied. Avalanche (AVAX) was a notable outperformer against Bitcoin, with the AVAX/BTC pair rallying an impressive 6.7% to 0.0002267. Conversely, Solana (SOL) and Cardano (ADA) both lost ground against BTC, with the SOL/BTC pair falling 2.3% and the ADA/BTC pair dropping 2.5%. This indicates a selective market where capital is flowing towards specific ecosystems or narratives, rather than a broad-based altcoin rally. The looming July 9 deadline for U.S. tariffs remains a wildcard. While Coinbase analysts noted in a recent report that markets have largely disregarded these economic risks so far, an escalation in trade disputes could quickly sour market sentiment and override the more optimistic scenarios centered on Fed rate cuts.