TL;DR
US equities saw a distinct rotation from tech into defensive value stocks as the Dow surged 2.22%, underpinned by a resilient labor market, with initial jobless claims declining to 215,000.
The Flash Composite PMI climbed to a two-year high of 54.4 amid persistent input cost pressures, presenting a nuanced macro backdrop as elevated mortgage rates continued to weigh on building permits, which fell to their lowest level since early last year.
The FOMC minutes signaled a shift in the monetary policy framework under Kevin Warsh, introducing an approach that explicitly links accelerated quantitative tightening to potential interest rate cuts.
HYPE surged 34.6%, driven by continued Hyperliquid ecosystem expansion, improved USDC liquidity, ongoing protocol buybacks, and growing institutional participation.
ZEC gained 23.4%, buoyed by optimism surrounding Grayscale’s spot ETF filing and reduced regulatory overhang following the SEC’s closure of its investigation into the Zcash Foundation.
Polymarket is reportedly exploring expansion into Japan amid mounting global regulatory scrutiny.
Kraken moves closer to a UAE market entry following regulatory approval from Dubai’s VARA.
Kalshi has extended its funding round by an additional $200M, with participation from Baillie Gifford and Layer Global.
Macro Overview
Value Rotation Accelerates Amid Warsh’s Fed Regime Change and Persistent Inflation
US indices posted a mostly positive performance last week as market leadership shifted notably. The Dow Jones Industrial Average significantly outperformed the broader market with a strong 2.22% gain, while the S&P 500 rose a more modest 0.79%. In contrast, the tech-heavy Nasdaq Composite remained virtually flat with a tiny 0.21% advance. This divergence shows a clear rotation out of expensive growth stocks and into value names. Investors are adjusting their portfolios to cope with ongoing geopolitical uncertainty and a higher-interest-rate environment. By favoring defensive sectors over mega-cap technology shares, market participants are seeking stable earnings and lower valuations to insulate themselves from broader macroeconomic shocks.
The S&P Global Flash US Composite PMI unexpectedly rose to 54.4 in May from 51.3 in April, indicating the fastest economic expansion in over two years. This acceleration was driven by the services PMI rising to 54.8, while the manufacturing PMI held at 50.9. However, the report highlighted persistent cost pressures as the input prices index continued to climb. In contrast, the Philadelphia Fed Manufacturing Index slowed down to 4.5 in May from 15.5 in April, showing a softer regional outlook. Together, these indicators present a complicated macroeconomic picture where strong overall demand keeps the economy growing, but sticky price components increase the risk of prolonged inflation.
Weekly initial jobless claims fell by 8,000 to a seasonally adjusted 215,000 for the week, beating the market consensus of 220,000. Continuing claims remained virtually unchanged at 1.79 million, showing that unemployed workers are still finding jobs relatively quickly. This low level of layoffs reinforces the narrative of a highly resilient labor market that refuses to buckle under elevated interest rates. For the Fed, this consistent employment strength provides the necessary economic cushion to maintain a restrictive stance. With no signs of an imminent labor market crack or recessionary breaks, policymakers can focus entirely on fighting stubborn inflation pressures.
High mortgage rates continued to weigh heavily on the real estate sector as April housing starts and building permits both registered soft figures. Housing starts rose slightly, by 5.7%, to an annualized rate of 1.36 million units following a sharp drop in March, but remained lower on a year-over-year basis. Meanwhile, building permits dropped 3.0% to an annual rate of 1.44 million units, which represents the lowest level since early last year. This combination shows that homebuilders are slowing new construction projects due to high financing costs and a growing inventory. The weak housing data illustrate a clear monetary policy transmission mechanism where high rates successfully cool capital-intensive sectors.
The latest FOMC minutes revealed a significant structural shift under new leadership as Kevin Warsh initiated a true regime change in monetary policy. The discussions highlighted a bold new framework that considers utilizing quantitative tightening adjustments to pave the way for eventual rate cuts. Warsh argued that managing the balance sheet aggressively provides the central bank with greater flexibility to ease borrowing costs without reigniting consumer price pressures. However, the minutes also stressed that this strategic pivot requires immense patience from market participants due to stubborn inflation components. By linking balance sheet normalization directly to interest rate policy, the Federal Reserve has introduced a sophisticated macro playbook that completely alters traditional policy expectations.
Next week’s economic calendar focuses heavily on the April core Personal Consumption Expenditures price index, which is the Federal Reserve’s preferred inflation gauge. Investors will examine this core PCE reading alongside the Q1 Gross Domestic Product second estimate on Thursday to evaluate ongoing stagflation risks. Additionally, Wednesday’s publication of the Fed’s Beige Book will offer crucial qualitative details on how regional districts are navigating supply chain issues and persistent wage pressures. Combined with housing price trends and consumer confidence updates, these major data points will dictate whether policymakers shift toward interest rate hikes later this year. (1)
DXY
The U.S. Dollar Index remained highly resilient last week, closing virtually flat as it ticked up from 99.28 to 99.32. This stable performance reflects a delicate macroeconomic balancing act. Ongoing safe-haven demand from unresolved geopolitical conflicts perfectly offset softer regional manufacturing indicators, keeping the greenback firmly consolidated at elevated levels. (2)
US 10-Year and 30-Year Bond Yields
U.S. Treasury yields eased slightly last week as the ten year yield dropped from 4.60% to 4.56% and the thirty year yield fell from 5.13% to 5.06%. This moderate rally in bond prices reflects a classic flight to safety. Investors aggressively sought the security of government debt to hedge against escalating geopolitical uncertainty in the Middle East. (3)
Gold
Gold prices experienced a minor pullback last week, sliding from $4,563 to $4,521, marking a 0.92% decline. This downward move demonstrates that elevated real yields continued to weigh on the precious metal. Strong pressure from restrictive monetary policy ultimately overrode the support typically provided by persistent geopolitical risk premiums and safe-haven buying. (4)
Crypto Markets Overview
Main Assets
ETH/BTC Ratio
BTC remained broadly flat last week, slipping only 0.5%, while ETH declined 1.6%. The ETH/BTC ratio also edged down 1% over the week. Spot BTC ETFs recorded US$1.26B in net outflows, marking the third-largest weekly outflow in BTC ETF history. Spot ETH ETFs also saw US$216M in net outflows. (5)
Market sentiment remained weak, with the Fear & Greed Index staying in the Fear zone at 30. (6)
Total Market Cap
Crypto Total Marketcap
Crypto Total Marketcap Excluding BTC and ETH
Crypto Total Marketcap Excluding Top 10 Dominance
Total crypto market cap also remained broadly flat, slipping only 0.4%. Excluding BTC and ETH, the market declined 0.6%, while the broader altcoin market outperformed, with market cap excluding the top 10 assets rising 4.2%.
STRC Performance
STRC recorded US$728M in trading volume last week, with all volume traded below par.
Following its May 15 ex-dividend date, STRC continued to trade below par, reflecting post-dividend profit-taking and weaker demand after the dividend capture period
Among Strategy’s financial instruments, STRC accounted for 77% of total trading volume, down from 93% the previous week. The second largest was SATA (Strategy’s variable-rate perpetual preferred stock) at 14.7%. (7)
Top 30 Crypto Assets Performance
Source: Coinmarketcap and Gate Ventures, as of 25th May 2026
Among the top 30 assets, prices declined 0.6% on average, HYPE and ZEC posted significant gains.
HYPE surged 34.6% last week, supported by continued growth in the Hyperliquid ecosystem, with USDC supply on the network surpassing US$4.11B, strengthening liquidity depth across trading, collateral, and settlement activity. (8)
Sentiment was further boosted by Hyperliquid’s Assistance Fund mechanism, which continuously deploys the majority of protocol trading fees into open-market HYPE buybacks, reinforcing the token’s reflexive demand dynamics.
The rally also coincided with growing institutional attention toward the ecosystem, including ETF exposure from Bitwise and 21Shares, alongside deeper USDC infrastructure integration with Circle and Coinbase. (9)
ZEC gained 23.4% last week, mainly driven by optimism surrounding Grayscale’s filing to convert its existing Zcash Trust into a spot ETF, which could become the first U.S. spot ETF for a privacy coin.
Sentiment was further supported by the SEC’s earlier closure of its long-running probe into the Zcash Foundation without enforcement action, significantly reducing regulatory overhang around ZEC and privacy-focused assets. (10)
The Key Crypto Highlights
Polymarket seeks Japan expansion amid rising global regulatory pressure
Polymarket is reportedly preparing to enter the Japanese market and is targeting regulatory approval by 2030, despite Japan’s strict online gambling laws and increasing global scrutiny toward prediction markets. The company has appointed Mike Eidlin, Jupiter’s head of Japan, to lead local expansion efforts, while citing strong organic demand from Japanese and broader Asian users, with its Japan-focused X account already surpassing 53,000 followers. (11)
U.S. lawmakers introduce PARITY Act to review crypto tax relief
A bipartisan group of U.S. lawmakers introduced the PARITY Act, which directs the Treasury and IRS to study a potential de minimis tax exemption for small crypto transactions and provide interim guidance within 180 days. The bill does not immediately create the exemption, but aims to assess reporting burdens, small transaction volumes, stablecoin tax treatment, broker safe harbors, and potential wash sale rules for digital assets. The proposal reflects growing congressional focus on modernizing crypto tax rules as the industry pushes for relief on low-value transactions and clearer treatment of payment stablecoins. (12)
Kraken moves closer to UAE launch after Dubai VARA approval
Kraken’s parent company, Payward, received preliminary approval from Dubai’s VARA for broker-dealer, investment and management services, paving the way for a broader UAE launch. The planned offering includes AED funding, margin trading, OTC services and Kraken Prime access for institutional clients. The approval reinforces Dubai’s position as a global crypto hub, with VARA’s regulatory clarity continuing to attract major exchanges and institutional liquidity. (13)
Key Ventures Deals
Kalshi extends funding round with an additional $200M from Baillie Gifford and Layer Global
Prediction market platform Kalshi raised an additional US$200 million from Baillie Gifford and Layer Global, extending its previously announced US$1 billion Series F round led by Coatue. The funding keeps Kalshi’s valuation at US$22 billion and comes as the platform’s monthly trading volume surpassed US$14 billion with annualized revenue exceeding US$1.5 billion. (14)
Variational raises $50M Series A to bring TradFi liquidity on-chain
Onchain derivatives protocol Variational raised a US$50 million Series A round led by Dragonfly Capital, with participation from Bain Capital Crypto and Coinbase Ventures. The company plans to expand its RWA perpetuals infrastructure, including commodities such as gold, silver, copper and oil, while scaling its RFQ-based liquidity model that aggregates pricing from traditional finance dealers and major exchanges instead of relying on isolated crypto order books. (15)
AEON raises $8M led by YZi Labs to build AI agent settlement infrastructure
AEON raised an US$8 million pre-seed round led by YZi Labs, with participation from IDG Capital, HashKey Capital and Stanford Blockchain Builders Fund. The company plans to expand its AI-native payment and settlement layer designed for autonomous AI agents, enabling agent-to-agent and agent-to-merchant transactions through its x402 infrastructure on BNB Chain. AEON said its payment network already connects AI agents with more than 50 million offline merchants globally. (16)
Ventures Market Metrics
The number of deals closed in the previous week was 24, with Infra having 12 deals, DeFi and Social having 6 deals respectively.
Weekly Venture Deal Summary, Source: Cryptorank and Gate Ventures, as of 25th May 2026
The total amount of disclosed funding raised in the previous week was $532.6M. The top funding came from the Social sector with $226.9M. Most funded deals: Kalshi ($200M).
Weekly Venture Deal Summary, Source: Cryptorank and Gate Ventures, as of 25th May 2026
Total weekly fundraising declined to $532.6M for the fourth week of May-2026, a decrease of 52% compared to the week prior.
Reference:
S&P Global Week Ahead Economic Preview, https://www.spglobal.com/market-intelligence/en/news-insights/research/2026/05/week-ahead-economic-preview-week-of-25-may-2026
DXY Index, TradingView, https://www.tradingview.com/chart/z1UD772v/?symbol=TVC%3ADXY
US 10 Year Bond Yield, TradingView, https://www.tradingview.com/chart/B9cgEklh/?symbol=TVC%3AUS10Y
Gold Price, TradingView, https://www.tradingview.com/chart/z1UD772v/?symbol=TVC%3AGOLD
BTC & ETH ETF Inflow: https://sosovalue.com/tc/assets/etf/us-btc-spot
BTC Greed and Fear Index: https://alternative.me/crypto/fear-and-greed-index/
Micro Strategy STRC Dashboard: https://bitcoinquant.co/company/MSTR
USDC Supply On Hyperliquid Surpasses $4B: https://coinmarketcap.com/community/articles/6a12067af6c15b25705580fe/
Hyperliquid HYPE Buyback Drives Token Rally More Than ETF Inflows: https://coinmarketcap.com/community/articles/6a12c3efa5c75b2a337536d3/
ZCash Grayscale ETF filing: https://coinmarketcap.com/community/articles/6a1307e82cfe94655474668d/
Polymarket seeks Japan expansion amid rising global regulatory pressure: https://cointelegraph.com/news/polymarket-seeks-japan-entry-global-regulatory-scrutiny
U.S. lawmakers introduce PARITY Act to review crypto tax relief: https://cointelegraph.com/news/us-lawmakers-introduce-bill-to-directing-irs-to-review-crypto-tax-exemptions
Kraken moves closer to UAE launch after Dubai VARA approval: https://cointelegraph.com/news/kraken-uae-vara-approval-ahead-of-full-region-launch
Kalshi extends funding round with additional $200M from Baillie Gifford and Layer Global: https://www.bloomberg.com/news/articles/2026-05-20/baillie-gifford-layer-global-add-200-million-to-kalshi-s-haul?taid=6a0e3e9a957a910001184e24
Variational raises $50M Series A to bring TradFi liquidity on-chain: https://fortune.com/2026/05/20/variational-raises-50-million-series-a/
AEON raises $8M led by YZi Labs to build AI agent settlement infrastructure:
About Gate Ventures
Gate Ventures, the venture capital arm of Gate.com, is focused on investments in decentralized infrastructure, middleware, and applications that will reshape the world in the Web 3.0 age. Working with industry leaders across the globe, Gate Ventures helps promising teams and startups that possess the ideas and capabilities needed to redefine social and financial interactions.
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