Cryptocurrency markets navigated a landscape of conflicting signals, initially shrugging off renewed geopolitical tensions before succumbing to a late-day selloff. Bitcoin (BTC) demonstrated relative stability for much of Friday, but late-session pressure pushed it down. As of the latest trading data, the BTC/USDT pair was trading around $108,600, marking a 0.6% decline over 24 hours. The trading range was notable, with a high of $110,493 and a low of $108,532, indicating that sellers took control as the session progressed. This price action was largely mirrored across the digital asset space, with a broad market index of the top 20 cryptocurrencies also falling by approximately 0.7%. The muted reaction initially came despite renewed threats of trade tariffs from the White House, which markets seemed to disregard as posturing rather than immediate economic risk.

Macro Headwinds Intensify as Markets Turn Risk-Off

The catalyst for the late-day downturn appeared to be a combination of escalating geopolitical rhetoric. President Trump's announcement of an end to trade discussions with Canada over a proposed Digital Services Tax, coupled with a threat of new tariffs within a week, set a cautious tone. This was compounded by heightened fears of a potential conflict in the Middle East involving Israel and Iran. While traditional stock markets managed to absorb the news and close with modest gains, the more speculative crypto markets were not as resilient. The selloff accelerated during U.S. evening hours on Thursday, with Bitcoin slipping below the critical $106,000 level before finding some support. This highlights crypto's sensitivity to macro-driven risk sentiment, where it often acts as a high-beta asset class that sells off more sharply than equities during periods of uncertainty.

Altcoin Underperformance and Key Levels to Watch

The broader market weakness was more pronounced in altcoins, signaling a flight to relative safety within the crypto ecosystem. Ether (ETH) saw a significant decline, with the ETH/USDT pair dropping around 1.3% to $2,552 after failing to hold above the $2,600 level. Its 24-hour high was $2,633, showing a clear rejection of higher prices. Other major altcoins experienced steeper losses, with Solana (SOL) falling 1.6% to $150.62, and Cardano (ADA) dropping 2.7% to $0.5812. The ETH/BTC pair, a key indicator of altcoin market strength, fell 2.5% to 0.0233, confirming that capital was rotating out of altcoins and into Bitcoin, or out of the market entirely. For traders, the immediate support for Bitcoin lies near the recent low of $108,500, while Ether must hold the psychological $2,500 level to avoid a deeper correction.

Divergence in Crypto Stocks and the AI Narrative

While spot crypto markets saw red, crypto-related equities experienced even more dramatic moves. Exchange operator Coinbase (COIN) saw its stock fall 6%, while the stablecoin issuer Circle (CRCL) plummeted a staggering 16%. Circle's stock has been under immense pressure, down 40% since its peak earlier in the week. This sharp divergence suggests that equity investors may be pricing in regulatory or business-specific risks not yet fully reflected in token prices. In contrast, the Bitcoin mining sector showed a mixed but fascinating picture. While Hut 8 (HUT) fell 6.5%, Core Scientific (CORZ) bucked the trend, remaining relatively flat after a massive 30% surge on Thursday. This surge was fueled by a report that AI cloud provider CoreWeave was exploring an acquisition of the mining company. This event underscores the powerful and growing narrative connecting the AI and crypto sectors, where the immense energy and computing infrastructure of Bitcoin miners are seen as valuable assets for AI development, creating unique, event-driven trading opportunities independent of broader market direction.

Looking ahead, traders are caught between hawkish central bank policy and weakening economic data. The latest Producer Price Index (PPI) for May came in softer than expected, and initial jobless claims remained elevated at 248,000, suggesting a cooling economy. This data could eventually force the Federal Reserve to adopt a more dovish stance, which would be bullish for risk assets like cryptocurrencies. However, Fed Chair Jerome Powell has remained steadfast, creating a tense standoff. President Trump's public criticism of the Fed adds another layer of political complexity. For now, the market remains data-dependent, with traders closely watching for signs of either economic deterioration forcing a policy shift or persistent inflation that keeps rates higher for longer. The key takeaway is that while macro risks are elevated, underlying economic trends and sector-specific narratives, like the AI-crypto convergence, continue to create distinct pockets of volatility and opportunity.