NEAR Protocol Leads AI Crypto Rally Amid Fed Rate Hike Fears

NEAR Protocol (NEAR) has emerged as a leading performer in the artificial intelligence (AI) cryptocurrency sector as hawkish signals from the US Federal Reserve triggered widespread selling across digital asset markets, according to a recent report from market maker Wintermute.

The Federal Reserve's latest meeting minutes indicated that most policymakers anticipate another interest rate hike before the end of 2026. The outlook pushed the 10-year US Treasury yield to a multi-year high of 5.24%, increasing pressure on risk-sensitive assets.

Despite tighter monetary conditions, traditional equities remained resilient. The S&P 500 gained 1.2% during the week, reaching a record high as expectations for 29% year-over-year corporate earnings growth helped offset rising borrowing costs.

Cryptocurrencies faced a different outcome. Spot Bitcoin exchange-traded funds (ETFs) recorded $679 million in weekly outflows, their largest since June, while Ethereum ETFs lost $542 million.

CoinGlass data also showed $1.19 billion in crypto liquidations, including $1.06 billion in long positions. Bitcoin declined 3.2% to approximately $83,000, while Ethereum dropped 7% amid concerns following an Ethereum Foundation researcher's warning urging users to migrate to new addresses.

The broader altcoin market experienced significant losses, with a median decline of 3.7%. Uniswap (UNI) plunged 15.8%, while only 11 of the 66 largest cryptocurrency projects finished the week with gains.

However, NEAR Protocol demonstrated relative strength as investors shifted attention toward AI-focused cryptocurrencies rather than traditional decentralized finance (DeFi) tokens.

Wintermute identified two major catalysts behind NEAR's rally. First, the blockchain introduced support for post-quantum digital signatures, strengthening its security infrastructure and attracting renewed investor interest.

Second, aggressive bearish positioning created conditions for a short squeeze. As NEAR prices recovered, traders holding short positions were forced to buy back tokens, accelerating the upward momentum.

The performance highlighted growing investor interest in blockchain projects connected to artificial intelligence, even as the wider cryptocurrency market struggled.

Nevertheless, Wintermute warned that buying altcoins during temporary recoveries remains risky until US Treasury yields stabilize and Bitcoin ETF inflows resume.

Investors are now monitoring upcoming US Consumer Price Index (CPI) data and major technology companies' earnings reports for clues about Federal Reserve policy and whether AI-related investment momentum can continue supporting the cryptocurrency market.