The week offered plenty of headlines but very little follow-through. CPI came in softer than expected, PPI reinforced the disinflation story, Fed hike odds continued to drift lower, and equities largely shrugged off another oil-driven flare-up in the Middle East. On paper, it was the kind of backdrop that should have helped crypto break higher.
Instead, BTC spent the week fading every rally attempt, while ETH quietly showed the more interesting relative strength beneath the surface. Markets often reveal more through what they fail to do than through what they achieve. Despite an increasingly supportive macro backdrop, the lack of follow-through suggests investors remain reluctant to deploy meaningful capital without a clear crypto-specific catalyst.
Macro: Cooling Prints, Warming Oil
June’s inflation data was the story of the week. Headline CPI fell to 3.5% year-over-year, its largest monthly decline since April 2020, while core inflation held at 2.6% against expectations closer to 2.9%. PPI followed through with a softer-than-expected -0.03% month-over-month print, reinforcing the narrative that pricing pressures continue to ease.
Fed commentary leaned into that improvement, with Williams pointing to inflation moving toward 3.25% by year-end alongside a still-resilient labor market. Markets responded by steadily reducing expectations for further tightening, with year-end hike odds easing.
Not everyone was ready to celebrate. Kevin Warsh struck a more cautious tone, arguing that one encouraging inflation print does not establish a trend and that the Fed remains some distance from declaring victory. Bond markets echoed some of that restraint, with investors proving far less enthusiastic than equities about pricing an imminent end to the inflation fight.
That caution may already be proving justified. Fresh escalation in the Middle East over the week has pushed Brent crude back above USD 80, briefly trading north of USD 85 on renewed Iran-related hostilities. Should higher energy prices persist, they risk undoing some of the progress seen in headline inflation and quickly reintroducing upside inflation risks into the Fed narrative.
Technology added another layer of caution. The Philadelphia Semiconductor Index (SOX) fell 4.3% during the week, while the Nasdaq 100 slipped 1.6% despite softer inflation. TSMC beat earnings but still fell around 4% as investors focused on another increase in
capital expenditure, dragging Taiwan’s benchmark index down 5.7%. The weakness spread across Asia, with Japan’s Nikkei falling nearly 6% and China’s CSI 300 down 2.5%, highlighting growing investor caution around the AI trade.
With the four largest US hyperscalers expected to spend more than USD 725 billion on AI infrastructure this year, markets appear to be shifting from asking whether AI demand exists to whether those investments will ultimately generate sufficient returns. That question is becoming an increasingly important driver of broader equity sentiment heading into next week.
Crypto: Same Range, Different Noise
BTC initially welcomed the softer inflation data, briefly rallying toward USD 65,200 following CPI before steadily giving back those gains throughout the week. Heading into today, price has once again settled into the familiar USD 62,000-USD 63,000 range that has contained much of July’s trading.
ETH quietly delivered the more constructive performance. Relative strength throughout the week (+5% on the week) suggests investors are becoming incrementally more comfortable moving beyond BTC, although it remains too early to conclude this marks the beginning of a broader altcoin rotation. Holding these levels will be important if ETH is to confirm that it has genuinely broken its recent structural downtrend.
The weakness across technology shares has inevitably spilled into crypto, particularly across higher-beta altcoins. The same de-rating affecting AI infrastructure names has weighed on more speculative digital assets as investors trim risk broadly rather than responding to crypto-specific developments.
The more interesting observation is what crypto has not done. Despite softer inflation, lower rate expectations and a generally supportive macro backdrop, BTC has failed to establish meaningful upside momentum. Markets often reveal more through what they fail to do than what they do, and the absence of follow-through suggests investors remain unwilling to commit meaningful capital until a more crypto-native catalyst emerges.
For now, our house view remains unchanged. We continue to expect crypto to trade within its familiar range, with majors well supported on dips but upside likely capped unless markets receive a genuine regulatory or macro surprise.
Looking Ahead: New York Takes the Floor
Today’s CLARITY Act field hearing in New York keeps the regulatory conversation alive, but it is ultimately a hearing rather than a legislative vote. Markets are more likely to focus on whether it produces any meaningful signals on the bill’s path through the Senate before the August recess than on the hearing itself. Any surprise headline could move crypto over the weekend, but absent that, attention will quickly shift back to month-end PCE and the next round of inflation data.
For now, little has fundamentally changed. Macro is improving, regulation remains uncertain, and BTC continues to reject both bullish and bearish extremes. With summer markets typically seeing lighter volumes and reduced participation, the seasonal lull is only reinforcing the current range-bound environment. Until one of those variables shifts decisively, the path of least resistance still appears to be sideways.
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