Hong Kong, China — Major cryptocurrencies struggled to gain momentum Monday, despite positive sentiment surrounding U.S.-China trade discussions that buoyed Asian markets. Bitcoin, the dominant digital currency, hovered around $105,650, showing little fluctuation after a weekend that left traders uncertain, as indicated by a doji candle formation.

Recent data revealed a sharp decline in cryptocurrency network activity. The seven-day moving average of daily on-chain transactions fell to 315,480, the lowest level recorded in over a year, highlighting a potential stagnation in market engagement. XRP, a cryptocurrency often associated with payment solutions, traded at $2.24, down more than 1%, as it failed to break above a descending trendline from mid-May. Traders speculate that volatility may rise this week with the APEX 2025 conference for the XRP Ledger primed to commence in Singapore.

Dogecoin, a popular meme token, also faced challenges, slipping nearly 2% to close in on 18 cents. This decline followed its inability to maintain a foothold above the 100-day simple moving average over the weekend, leaving traders concerned about its near-term prospects.

In the broader market, Hong Kong’s Hang Seng index surged 1.3%, surpassing the 24,000 threshold for the first time since March. The rise was primarily fueled by growing optimism regarding renewed trade talks between the U.S. and China. Analysts noted that this surge reflects the highest level of optimism surrounding trade discussions since former President Donald Trump’s election. The meetings, which commenced on Monday in London, are expected to last throughout the week.

While U.S.-China trade negotiations generated hope, China’s economic indicators offered a stark contrast. Data released by the National Bureau of Statistics revealed that consumer prices fell 0.1% year-over-year in May, marking the first instance of deflation since February. Similarly, the producer price index saw a steeper decline of 3.3%, surpassing analysts’ expectations and indicating persistent deflation since October 2022.

Experts warn that ongoing U.S. tariffs are exerting considerable pressure on major exporting nations like China, potentially exacerbating the economic situation. Robin Brooks from the Brookings Institution noted that the combination of weak consumer spending and an existing debt burden is pushing China towards heightened deflation. This shift in the economic landscape may compel the Chinese government to introduce further measures to stimulate domestic demand through liquidity injections.

Recently, China’s central bank reduced key interest rates to a historic low and adjusted the reserve requirement ratio, aimed at easing monetary conditions. Reports suggest that there may be additional moves to decrease the reserve requirement further as a strategy to bolster growth and stimulate market activity.

As markets look ahead, all eyes will be on the upcoming U.S. consumer price index report. Scheduled for release on Wednesday, the data is expected to reveal insights into how trade tariffs are influencing overall price levels within the economy. Economists predict that the headline CPI will remain steady with a month-on-month increase of 0.2%, equating to an annual rise of 2.5%. In contrast, core inflation—excluding food and energy—is projected to climb slightly, potentially affecting future Federal Reserve rate cuts.

Amid this complex economic backdrop, the intertwining impacts of global trade dynamics and domestic inflation will shape market sentiment as traders navigate uncertainty in both cryptocurrency and traditional financial markets.