tl;dr
The Asia Pacific Morning Brief reports increased US employment challenges, heightening tensions between the Trump administration and the Federal Reserve over interest rate cuts. Recent data suggests stagflation concerns, reducing the likelihood of three rate cuts this year and causing cryptocurrency...
Welcome to the Asia Pacific Morning Brief, bringing you the latest overnight crypto developments influencing regional markets and global sentiment. This edition recaps last week’s events and offers a forecast for the coming days.
The US employment situation has worsened dramatically, intensifying the dispute between the Trump administration and the Federal Reserve over interest rate cuts. The outlook for interest rates over the next three months has been volatile, reacting sensitively to inflation and employment data releases.
Last week’s cryptocurrency market volatility began with the ISM Services PMI indicating a slowdown in the US services sector, combined with rising prices and declining employment—a classic sign of stagflation. This has spurred concerns that tariffs imposed by the Trump administration might be steering the US economy into this challenging scenario. Consequently, the odds of three interest rate cuts this year have diminished to two, causing risk asset prices, including cryptocurrencies, to fluctuate sharply in response to these evolving expectations.
The week ended with Stephen Miran, a close economic advisor to President Trump, being appointed to the Fed Governor’s vacant seat, signaling a potential push for lower interest rates. The US stock market closed optimistic, expecting three rate cuts within the year.
Ethereum made a remarkable recovery fueled by Fed Vice Chair Michelle Bowman’s public affirmation of the necessity for three rate cuts, which pushed Ethereum’s price above $4,300 temporarily. However, BlackRock’s unexpected substantial withdrawals from both its Bitcoin and Ethereum spot ETFs cast uncertainty over the market, triggering fears of Bitcoin falling back to $111,000 and temporarily halting Ethereum’s 21-day net inflow streak.
Despite this, Ethereum bounced back faster than Bitcoin, buoyed by strategic acquisitions by U.S.-listed companies. Bitmain solidified its status as the largest publicly listed Ethereum holder, boasting over 830,000 ETH. Investment guru Tom Lee declared that buying Ethereum would be his most critical trade over the next decade, while experts from Standard Chartered Bank highlighted that stocks of companies purchasing Ethereum might represent a more lucrative investment than Ethereum spot ETFs. The week also saw President Trump signing orders aimed at protecting lawful crypto businesses from debanking and expanding retirement fund options.
Ethereum significantly outperformed its peers—posting a 25.01% weekly gain compared to Bitcoin’s 5.44% and Solana’s 15.04%. This stark growth underscores Ethereum’s dominant presence in the crypto space.
Looking forward, the market continues to focus on the Fed’s approach to interest rates, particularly in light of upcoming economic data such as Tuesday’s July Consumer Price Index (CPI), Thursday’s Producer Price Index (PPI), and Friday’s industrial production and retail sales figures. These releases will shed light on the trajectory of the US economy and influence expectations for interest rate cuts.
Fed officials’ commentary also holds significant sway ahead of the September Federal Open Market Committee (FOMC) meeting. Chicago Fed President Austan Goolsbee’s upcoming speech could offer crucial insights. Currently, there is an 88.4% probability of a 0.25% rate cut at the September meeting, though this could fluctuate depending on new data and market conditions.
As we proceed into this critical week, investors and market watchers should remain alert to economic signals and policy cues that will shape the future of cryptocurrencies and broader financial markets.