Weekly Market Update: Win-Win for Blockchain

If this cycle is different..

The Fed just cut interest rates into rising inflation, blaming both Trump and the jobs market as most asset prices are already pushing all-time highs including stocks, gold, property and crypto. Inflation at the last read was back at 2.9% for the 12-months to August and threatening to run higher, as the full weight of Trump’s trade war tariffs bear down on the American consumer. 

The 10-year Treasury yield snubbed the cut and jumped from 4.0% to 4.15% on the announcement, with whispers of 5% on the horizon as further Quantitative Easing (QE) looms. 

Why? Because America has a $37 trillion debt problem. DOGE didn’t even make a dent. And President Trump has been rolling out his America First playbook at an increasingly frantic pace, conscious that the fiscal cliff is quickly approaching – but is it too little too late? The odds are certainly stacked against him. 

Trump’s America First policies are aimed at slashing the debt monster through economic nationalism including tax cuts, deregulation, trade tariffs, energy independence and federal spending cuts. He has some tricks up his sleeve (as mentioned in last week’s newsletter), but is America really willing and able to “do what it takes” to turn this ship around?

A sobering reality check from Argentina this week, reports of soaring inflation and a plummeting Peso amid political and economic turmoil – after dramatic policy changes it was quickly hailed President Milei’s modern economic miracle – the U.S. is now offering a financial lifeline.

Meanwhile, BRICS is not taking any chances, they have been stacking gold and other commodities hand-over-first in preparation for a (rumoured) new currency. The SWIFT system has seen a 15% decline in volume due to new competition from BRICS payment systems and blockchain based digital networks, like Stablecoins, providing faster and cheaper alternatives.

Western nations on the other hand have slashed gold holdings and financialised their economies, whilst doing a slow motion u-turn on Bitcoin and crypto.

Once mocked as “criminal money,” Bitcoin is now gaining acceptance and legitimacy as an alternative store of value. At a $1.2 trillion market cap it’s just 10% of gold’s $12 trillion, but Coinbase’s CEO claims G20 nations are all eyeing strategic Bitcoin reserves. 

The Genius Act was the beginning, watch the further developments around The Clarity Act (Market Structure Bill) in coming weeks.

So what is really going on here? What we see playing out is a fragmentation of the global monetary system into West vs “Global South”.

The BRICS+ countries (collectively the Global South) are looking to a gold and commodities backed blockchain technology based system. And the West is looking to Bitcoin and Stablecoins to digitise the current global reserve USD for the next macro monetary cycle. 

How it will all play out is anyone’s guess. But it’ll likely be a win-win for blockchain technology! And Bitcoin is poised to benefit.

Market sentiment dropped back to: Fear

Crypto market moves: 

• Red September has once again reared its ugly head, turning bullish sentiment around the U.S. rate cut into fear and doubt about growing signs of sector exhaustion.
• Bitcoin swung from a high just below $118k to a low just under $112k.
• Bitcoin noticeably diverged from gold and silver this week as they keep rising to new daily all-time highs, leaving many to speculate about what whales may know is coming.
• Despite the sell off, Bitcoin and Ethereum ETFs attracted $1.9 billion in the past week.
• Polymarket shows a 50% chance of Bitcoin hitting either $100k or $130k first. 
• $6 billion in Bitcoin shorts will be liquidated at $120,000!
• After trading just shy of a new high, the total crypto market cap has retreated back to below the $4 trillion mark.
• The Fear & Greed index dropped back into “Fear” territory and Google search volume for “Bitcoin” and “Cryptocurrency” search terms paired back.
• 70% of the top 100 Altcoins outperformed BTC in the last 90 days, slightly down from last week, but don’t rule out Altseason just yet.
• Bitcoin dominance remains firm at 58% and monthly RSI at 69%. 
• The big winner of the week is NEAR (Near Protocol) +9.8% on renewed AI momentum.
• The surprise mover of the week is BNB (Binance) +6.7% and breaking the $1,000 price level for the first time, driven by institutional demand.
• The big loser of the week is BONK) -15.2%, as MemeCoins took a hit in the broader sector sell-off.

View all top gainers: Visit the top gainers page to find out more.

Highlights from the crypto space:

The U.S. Fed’s rate cut failed to propel Bitcoin or the broader crypto market to new highs. An initial rally quickly lost momentum as Bitcoin slid below $112k to start the week, and crypto traders suffered $1.7 billion of liquidations in the past 24 hours.

We’re now 523 days since the last Bitcoin halving in April 2024. The previous cycle halving to peak was 532 days, and the one before that was 525 days.

This bull run has felt relatively sluggish and lacking in euphoria – if this time is different, the market may punish those who have synced to the traditional Bitcoin cyclical pattern. Time will tell.

Binance founder Changpeng Zhao (CZ) seems to think so, saying “we may not have reached the true bull market yet.” 

Helius Medical Technologies raised over $500 million in a private financing round led by Pantera Capital to launch a Solana treasury company. The stock responded with 250% gains!

A golden statue of President Trump holding a Bitcoin was placed outside of the U.S. capital building last week, just ahead of the Fed’s rate cut decision.

Crypto’s rich list now comprises 36 billionaires and over 240k millionaires, according to a new wealth report. The number of crypto millionaires has increased by 40% year-over-year, primarily driven by bitcoin investors.

Michael Saylor has gone out on a limb (again) claiming that Bitcoin will “become the largest asset in the world in the next 48 months.” He also warned that growing institutional adoption could transform the asset from an adrenaline-fueled investment into a “boring” store of value.

JPMorgan cautioned that the U.S. Stablecoin market may remain a “zero-sum game” unless the broader crypto market keeps growing, saying Circle’s USDC faces intense competition as Tether readies its compliant USAT stablecoin, Hyperliquid launches USDH, and fintechs like Robinhood and Revolut explore stablecoin products.

Coinbase CEO made a bold statement about the company’s future, saying “yes, we do want to become a super app and provide all types of financial services. We want to become people’s primary financial account and I think that crypto has a right to do that.” Watch out TradFi.

According to a new survey from MEXC, 46% of global users now cite inflation protection as their primary reason for entering crypto, up from 29% in Q1.  

In other crypto news…

• Bitcoin mining company Bit Digital claims that Bitcoin mining is a doomed industry and it will be dead in 2 years.

• The U.K’s IG Group agreed to acquire the Australian crypto exchange Independent Reserve. 

• Alipay Europe, based in Luxembourg, has been granted a licence which may pave the way for a Euro Stablecoin. Watch this space.

• Google launched an open-source protocol that enables AI agents to send and receive payments, including stablecoins, through partnerships with Coinbase and more.

• Japan’s Metaplanet has become the 5th largest corporate Bitcoin holder.

• Investors piled into the first Dogecoin and XRP ETFs in the US on their debut trading day, blasting through analyst’s volume expectations.

• SEC Chair Paul Atkins confirmed he is working with lawmakers to help pass the crypto market structure bill, likely before the end of this year.

Stay connected with more Crypto Insights

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🌎 Macro news TLDR: The stage is set for upheaval

At a certain point in the macro monetary cycle, a central bank’s ability to steer the broader economy through money supply manipulation and interest rate adjustments begins to yield diminishing returns. 

We’ve reached a convergence of mega trends that will disproportionately impact even the most resilient economies: the tail end of the fiat debt-based system, declining birth rates across the Western world, cultural fragmentation driven by replacement immigration, and the exponential growth of technology, particularly AI, threatening jobs.

This confluence has fueled noticeable turbulence and volatility in markets and societies. 

By design, the fiat system is a debt-based construct that erodes wealth over time through inflation, tethering people’s energy to a currency that steadily loses value.

Last week, Billionaire Ray Dalio warned that all fiat currencies are struggling to maintain their roles as repositories of wealth. And a Goldman trader echoed this sentiment: “There’s a sense that money is losing value anyway, so it’s better to spend it now than hold it.”

The disconnect is starkly evident in the actions of the elite. From Larry Ellison and his families significant buying spree to Trump casually suggesting which billionaire buddy might snag the next deal, the ultra-wealthy operate in a world far removed from the average person’s reality. 

History offers a warning – France’s “let them eat cake” moment sparked revolution for a reason. Whether through communism or crony capitalism, the endgame is the same: a system that concentrates wealth and power while leaving the masses to grapple with the consequences.

Easy money policies, meant to stimulate growth, have instead inflated asset bubbles and widened inequality, eroding the purchasing power of everyday people. Inflation, the silent tax of fiat systems, punishes both workers and savers while rewarding speculators and the well-connected. 

The stage is set for upheaval. Without a return to sound money, the cycle of easy money and runaway inflation risks igniting a reckoning – one that history shows is never gentle.

Economic news from the Americas

The Fed issued a widely anticipated 25 bps rate cut and confirmed that two more are likely on the way before year end, as concerns intensified over the U.S. labor market and rising inflation.

Hopes of a broad market rally were muted by Fed Chair Powell when he signalled that only one rate cut is in the works for 2026.

Donald Trump undertook a second state visit to Britain filled with royal pomp and diplomatic talks – securing a significant bilateral technology and investment deal and reaffirming the “special relationship,” but largely sidestepping any real tough issues or disagreements. 

A lavish state banquet was hosted by King Charles III at Windsor Castle’s St. George’s Hall, it was a meticulously choreographed affair, gathering 160 royals, politicians and tech CEOs for fine dining and speeches aimed at diplomacy.

President Trump is expected to meet with Senate Democrat Minority Leaders later this week as lawmakers stare down a government funding deadline and potential shutdown.

President Trump signed an unexpected executive order last Friday to impose a $100,000 application and annual renewal fee for H-1B visas, in an effort to curb what his administration says is overuse of the program – likely to disproportionately affect tech companies.

Argentina is grappling with soaring inflation (again) and a run on the peso that has battered domestic asset prices. The U.S. has stepped in with the promise of a financial lifeline.

The Peso tumbled 4.5% last week as investors questioned President Milei’s ability to deliver fiscal and structural reforms, compounded by a corruption investigation involving a family member.

The next U.S. inflation report is due out at the end of this week and it will reveal if the Fed’s rate cut was a good idea or the wrong move. 

Over in Europe & the Middle East…

The Bank of England held its main interest rate steady at 4%, in a decision that was widely anticipated, as inflation remains stubbornly high. The latest inflation report showed prices increased ahead of expectations at 3.8% in the year to August.

Disruption at some European airports continued for a second day on Sunday after a cyberattack targeted check-in technology company Collins Aerospace. The U.K.’s largest airport, Heathrow, was among those affected, along with airports in Berlin and Brussels.

The Estonian government claimed that three MiG-31 Russian fighter jets stayed in its airspace for 12 minutes. The incident, which Russia denied, happened a little more than a week after 20 Russian drones entered Polish airspace.

President Macron used a UN meeting to announce that France will join the UK, Canada and Australia in formally recognising a Palestinian state as more countries are expected to join in the lead up to the United Nations 80 year commemoration meeting this week.

Saudi Arabia and nuclear-weapons capable Pakistan signed a mutual defence pact last week, strengthening a decades-old security partnership just one week after Israel’s strike on Qatar.

A Taliban official has rejected the idea that the U.S. could retake a key airbase in Afghanistan after President Trump told reporters he wanted it back.

And in Asia Pacific…

China kept its benchmark lending rates unchanged for the fourth straight month on Monday despite the U.S. Fed interest rate cut last week.

China has banned its companies from buying Nvidia chips, which comprised 13.1% of the company’s revenue in the financial year ending January 2025.

Japan’s Nikkei 225 hit record highs last week before retreating – as headline inflation dropped to 2.7%, from 3.1% in July, marking a fresh low since November 2024.

Australian employment decreased by 5,400 jobs in August, following a gain of 24,500 workers in July, but the unemployment rate held steady at 4.2 per cent.

Bad news keeps coming for the NZ economy with a shock decline in GDP of 0.9% in the June quarter. In a sea of bad, construction and mining were nothing short of horrific.

The issues though, are broad based, with falls in 10 of 16 industry categories. A perfect storm of rising energy costs, tariffs and central government austerity are wreaking havoc on the economy

Westpac and Kiwibank economists have called on the RBNZ for a double rate cut in October, saying “we have been advocating for a 2.5% cash rate for over 2 years. And now it is crystal clear that current monetary policy settings, with a 3% cash rate, are not enough. We are advocating a 50bp move in October.”

The ASB Investor Confidence Survey fell to its lowest level since the Covid pandemic.

Ending on some good news, the jobs market is showing early signs of turning a corner, as Monthly Employment Indicators show that in July there was a seasonally-adjusted 0.2% rise in filled jobs, following on from a 0.1% rise in June. That’s the first time we’ve seen consecutive monthly gains in nearly two years.

That’s a wrap for this week!

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