Cooler Inflation Supports Markets as USD Declines

Weekly News Wrap Up

U.S. inflation slid to a more than 2Y low of 3.0% prompting a rally in risk assets as markets anticipate July’s potential rate-hike as the final one in the cycle – equity markets rose, Treasury yields declined, and the USD sank. In crypto, Ripple (XRP) scored a partial win in its case against the U.S. SEC – a judge ruled that institutional sales of the token violated federal securities law, but sales on public exchanges did not.

Weaker inflation drove U.S. equity markets higher last week: SPX +2.42%, DJIA +2.29% and NASDAQ +3.32%. Cryptocurrency majors BTC +0.26% and ETH +3.16% followed the general market and also benefited from the XRP news, but succumbed to profit-taking pressures late in the week.

On-chain, data from Glassnode shows the impact of the recent wave of spot Bitcoin ETF applications in the U.S. – the supply of Bitcoin (BTC) held by US entities has increased, suggesting a significant change in BTC supply dominance. Previously, Asia had a strong presence in the BTC market with US supply dominance having fallen by 11% since mid-2022 as regulatory actions and uncertainty in the US led some entities to move their operations offshore. However, even with Asia’s receptive approach to the crypto ecosystem, for the foreseeable future, it seems that the trend will reverse course, with Asia’s crypto holdings falling relative to the US.




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Investment Consideration

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