Why did crypto ETFs flip after 8 weeks of outflows?
There’s never a dull moment onchain. Here’s what you need to know this week:
BTC and ETH just erased most of June's losses. For the first time in six years, U.S. inflation actually fell — and crypto markets noticed immediately.
Crypto ETFs snapped their worst losing streak ever. After $8.6 billion in outflows over 8 weeks, inflows finally returned. But is the worst over?
Japan, the UK, and Bolivia are making big crypto moves. Here's what they're doing, and what it could mean for markets.
MARKET BYTES
BTC, ETH rally on softer-than-expected inflation data
For the first time in six years, the U.S. consumer price index, a key indicator of inflation, fell in June — with lower gas prices related to an easing in the Iran conflict a major contributor. On Wednesday, another major inflation indicator, which measures wholesale prices, also came in cooler-than-expected.
Crypto markets, alongside stocks and bonds, bounced following the news. Bitcoin, which was up past $65,000 for the first time in almost a month, erased most of the losses it suffered during a truly dismal June. Ethereum was up even more, gaining almost 12% for the week and climbing close to $1,950.
Why? Because the soft inflation data sharply reduced fears that the Federal Reserve would raise interest rates at its next meeting in late July. As of Wednesday, 96% of prediction market traders said that rates would remain steady, compared to just 67% on Monday.
(Crypto traders generally see falling interest rates as a bullish signal because the combination of cheaper borrowing and lower returns on cash holdings tend to mean more capital flows to asset classes like stocks and crypto.)
That said, rate-hike fears for later in the year are far from dead. Given that the Iran conflict and oil prices have both been ramping back up, some analysts predict that the economic picture could flip again by September’s Fed meeting. "We still think it's a matter of when, rather than if, the Fed will raise interest rates," noted analysts at Capital Economics. "The big picture to us is that the AI investment boom, coupled with signs of rebounding consumer demand, will continue to keep core inflation above target."
Here’s more news you should know…
Crypto ETFs flipped positive after eight straight weeks of outflows
U.S. spot bitcoin ETFs finally snapped their longest down streak since they began trading way back in the beginning of 2024. After shedding $8.26 billion over the last two months, the asset class gained around $281.8 million in inflows last week, according to SoSo Value data.
With Ethereum ETFs also rallying for the first time since the week of May 4 — racking up around $84.4 million in new capital — some market watchers are cautiously optimistic that the worst of the doldrums are behind us. As Bloomberg reports, “Bitcoin is carving out a floor somewhere between roughly $57,000 and $63,000, barring another macro shock, according to an analyst at Glassnode. ‘Absent a black swan or external sell signal, this looks like an ideal bottom-formation range,’ they said.”
Maturing asset… "Bottom line, any crypto correction is painful, but this one has been rather comforting,” said Bernstein digital assets analyst Gautam Chhugani. “Crypto feels like it's growing up. We remain optimistic on bitcoin long term.”
Stablecoins became the cheapest cross-border option in Q2
According to a new report from Borderless.xyz, the average cost of making a cross-border payment using stablecoins fell below the interbank foreign exchange rate for the first time in Q2 of this year.
In plain English, that means it was cheaper to move money internationally using stablecoins — which anyone has access to — than banks pay to use their own interbank system (which costs them much less than consumers pay to send money).
In other stablecoin news, the U.S. and U.K. governments are working together to make stablecoin transactions between the two nations as seamless as possible. “The initiative includes creating a group to test tokenized assets across borders, more coordination between regulators on crypto rules, and supporting a review of how banks should treat crypto assets for capital purposes,” notes Bloomberg.
Friendly competition… The plan reflects “our shared commitment to fostering economic growth and advancing global standards that reward innovation and competition,” said US Treasury Secretary Scott Bessent.
AROUND THE WORLD
Why Japan, the U.K., and Bolivia are doubling down on crypto
Major governments are no longer just weighing whether crypto can benefit their economies – they’re actively working toward building a digital, blockchain-based future. Japan is on the verge of passing landmark crypto legislation, the U.K. is looking to launch live tokenized markets next fall, and Bolivia could soon accept stablecoins as legal tender.
Here’s everything you need to know.
SBI Holdings wants to be Japan’s biggest crypto player
Japan’s parliament is on the verge of passing major crypto legislation, and some of the country’s leading financial firms are jockeying for positioning in the upcoming digital asset landscape. The bill would regulate crypto in the same way as stocks and drop the tax on gains to a flat 20% rate with the goal of fostering “healthy market growth” and promoting Japan as a major crypto hub.
One firm in particular, SBI Group, has been pushing to become a leading player in Japan’s crypto industry. The firm, which controls more than $250 billion in assets, was the sole investor in a $125 million fundraising round for the institutional DeFi startup Gauntlet last week; acquired the Japanese exchange Bitbank for around $289 million in June; and recently participated in funding rounds for Morpho and Circle’s stablecoin-focused blockchain, Arc.
The company pointed to the imminent arrival of the “token economy” – where all assets are tokenized, and trading and payment settlement happens on blockchains – and says it “is working to establish itself as early as possible as a global leading company in the rapidly evolving digital asset space.”
SBI also just launched a Japanese yen-denominated stablecoin that it plans to use for onchain currency trades, institutional lending, and settlement for tokenized assets. The firm is also distributing USDC in Japan in partnership with Circle through its subsidiary, Shinsei Bank, which is part of a JPMorgan-backed blockchain network focused on tokenized cross-border transactions.
Joseph Goh, director and head of Asia Pacific at crypto investment banking firm Areta, says SBI’s strategy is ambitious for a traditional financial group. "The takeaway is that SBI is not buying exposure to crypto, it is buying the plumbing of the next financial system,” he said.
The U.K. wants to launch live tokenized markets in 2027
A recently released report backed by the U.K.’s Treasury found that a successful tokenization strategy could unlock more than $44 billion in economic output for the country and around $18 billion in additional tax revenue annually by 2035. The report, released by the government’s new digital-markets leader (officially known as “the Wholesale Digital Markets Champion”), argued that tokenization is beyond the experimentation phase and requires coordination from the government, regulators, and the private sector to ensure the U.K. has a position in the next generation of financial markets.
The report also named Ripple, the payments firm linked to the XRP token, as part of a task force driving the process of helping the U.K. move some of its financial markets onchain and cited Ripple’s partnership with Santander U.K. for cross-border payments as an example of a successful use-case.
BlackRock, Goldman Sachs, HSBC, JPMorgan, Coinbase, and Morgan Stanley are among the firms working with the government on its tokenization strategy, with a goal of launching live with tokenized private credit, government bonds, and repo agreements by October 2027.
Bolivia could integrate stablecoins into its national payments system
The South American country is considering adding stablecoins to its national payments system, allowing them to circulate alongside the boliviano, its fiat currency. The plan is still under review, but officials are also developing a framework for banks, payment providers and digital wallets, as well as stronger anti-money laundering controls.
Bolivia has seen a sharp rise in crypto adoption after bank restrictions were lifted in 2024, with the central bank reporting that crypto transactions are up 630% since the removal of the restrictions. As U.S. dollars — which are often needed for international trade — become increasingly scarce in Bolivia, the state energy company, for example, announced last year it would be using crypto to pay for fuel imports. And the state controlled Banco Unión has started letting customers buy stablecoins to use for international payments or remittances.
Overall, crypto adoption has skyrocketed in Latin America, largely due to its utility for cross-border transfers and payments. A report from this spring found the region, led by Brazil and Argentina, received more than $730 billion in crypto transaction volume last year, up 60% from the year prior and representing roughly 10% of all global crypto activity.
NUMBERS TO KNOW
4.8%
The share of Ethereum’s overall supply that is now owned by crypto treasury firm Bitmine Immersion Technologies, worth roughly $10 billion. The firm, which is 96% of the way toward its goal of owning 5% of ETH, has also staked 85% of its holdings, earning nearly $250 million in annual revenue.
$1.2 billion
The amount that the crypto venture capital firm Paradigm raised for its third venture fund. The fund will focus on crypto, AI, and robotics, and follows the firm’s $2.5 billion fund from 2021, and $850 million fund from 2024.
17
The number of banks, including HSBC, Wells Fargo, and Citi, that are preparing to test live transactions on SWIFT’s new blockchain-based ledger. SWIFT, the international payments network used by more than 11,000 banks, said the goal of the blockchain system is to allow banks to move funds for customers overnight and on weekends.
TOKEN TRIVIA
How many Bitcoin blocks are mined between halvings?
A
210,000
B
420,000
C
630,000
D
840,000
Find the answer below.
Trivia Answer
A
210,000
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