Crypto Markets Slump in May as Quant Funds Stay Profitable

The crypto market faced renewed pressure in May as rising geopolitical risks and weaker investor risk appetite weighed on digital assets, according to Gate Private Wealth Management’s report. While major cryptocurrencies declined during the month, quantitative investment products moved in the opposite direction, with most strategies posting positive returns and limiting losses despite market volatility.

The report showed a widening gap between the performance of crypto assets and the results achieved by quantitative trading strategies. At the same time, broader economic indicators pointed to continued business investment growth, while inflation remained a key factor impacting expectations ahead of the U.S. Federal Reserve’s June policy meeting.

Crypto Assets Retreat as Market Sentiment Weakens

Bitcoin and Ether both ended May lower as risk demand across the digital asset market deteriorated. According to the report, Bitcoin declined by about 2.9% during the month, while Ether fell by more than 11%.

The decline came as geopolitical tensions increased and investors reduced exposure to risk-sensitive assets. The report noted that Ether redeemed gains accumulated since April 2025, while Bitcoin also reached a new monthly low during the period.

In contrast, U.S. equities continued to advance. The report attributed stock market strength to stronger-than-expected earnings from companies in the artificial intelligence sector and to growing expectations that interest rate cuts could arrive later in the year.

Quantitative Strategies Deliver Positive Results

Despite weakness in the crypto market, quantitative funds reported stronger performance in May. The report stated that 90% of the strategies reviewed generated positive returns during the month, contributing to an overall recovery in net asset value across the fund portfolio.

Among the products analyzed, the Interstellar Hedge (USDT) strategy produced the strongest results. The strategy recorded a cumulative return of 18.6% and generated positive returns in all 23 periods examined in the report, resulting in a 100% win rate.

Economic Outlook Focuses on Inflation and Policy

Looking ahead, the report pointed to continued economic momentum supported by business spending. Corporate investment expanded at an annualized rate of 6.4% during the first quarter, while investment linked to artificial intelligence continued to emerge as an important contributor to growth.

Inflation was identified as the primary economic risk. Based on current conditions, the report stated that the federal funds rate is expected to remain unchanged at the Federal Open Market Committee’s upcoming June meeting.

The report also highlighted developments surrounding stablecoin regulation. As implementation measures tied to the GENIUS Act emerge, the structure governing stablecoins is moving from legislation toward execution, marking the next stage of regulatory development.

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