ETHCLIMBSAS BTCCONSOLIDATES
MARKETSIGNALS
PreJacksonHoleRisk-Off; PostJacksonHoleRisk-On
MACROUPDATE
MarketsFindReliefAmidPowell CommentsandHousingStrength, butIn ationRisksPersist
EXECUTIVESUMMARY
As the annual Jackson Hole Economic symposium of central bankers got underway last week, Bitcoin was on the defensive, sliding nearly 10 percent from itshighsasinvestorsde-riskedintoweakerETFflowsandhotterinflationdata.The tone,however,flippedsharplypost-symposiumafterFedChairmanJeromePowell struck a dovish balance, sparking a short squeeze across digital assets that lifted majors and restored market confidence. Ethereum outperformed, surging to fresh all-timehighs,reaching$4958.70onSunday,reinforcingitsemergingroleasakey liquiditydriverforinstitutionaldemand,whilecontinuedBTCconsolidationsignals apauseratherthanstructuralweakness.
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Flows remain the central driver of price: US spot ETFs saw their heaviest week of outflows since April, with Bitcoin ETFs seeing $1.18bn of net outflows while Ethereum ETFslost$197minasingle day.
Yettreasuryaccumulationhassteppedintoabsorbsupply,keepingnetstructural demand resilient. With global liquidity still trending higher and ETH corporate treasury balances expanding beyond $10B, the long-term backdrop remains constructive.BTClookssettotraderange-boundinthenearterm,whileETHleads rotationandaltcoinsawaitbroadervehiclestounlocksustainedinflowslaterinthe cycle.
Federal Reserve Chair Jerome Powellʼs Jackson Hole speech boosted markets with expectations of a September rate cut. Still, he stopped short of firm commitments that he would do so, stressingtheFedʼsbalancingactbetween inflationandemployment.WhileTreasury yields fell and equities rallied, Powell signalled a more cautious stance than in past cycles, suggesting cuts may be limited. Meanwhile, the US housing market showed resilience with a July rebound in multifamily construction, though permits fell to a five-year low, reflectingbuildercaution.
Mortgage rates have eased slightly but remain elevated, keeping affordability strained. Beyond housing, stronger business activity in both manufacturing and services suggests economic momentum, but rising input costs and higher consumerpricespointtopersistentinflationpressures.
In parallel, the crypto industry saw significant moves: Thailand launched a pilot crypto-to-baht programme to boost tourism, SharpLink Gaming expanded its Ethereum holdings past 740,000 ETH, and the CFTC widened its “CryptoSprintˮtoadvanceUSdigital asset regulation in coordination with theSEC.
● PreJacksonHoleRisk-Off;Post JacksonHoleRisk-On
● PowellʼsJacksonHoleSpeech:Markets Cheer,butRisksLinger
● USHousingMarketShowsResilience, butBroaderEconomyFacesInflation Pressures
● ThailandʼsTourismRevivalvia TouristDigiPay
● SharpLinkʼsETHTreasurySurge:Strategic AccumulationDeepens
PreJacksonHoleRisk-Off;Post JacksonHoleRisk-On
Bitcoin extended its decline last week, in line with our long-held thesis that without strong spot inflows from ETF buying or Bitcoin treasury company accumulation, the price will come under pressure. The Jackson Hole symposium,ameetingofFederalReservegovernorsthatwasheldlastweek, also marked a critical event for risk markets, providing an insight into the FederalReserveʼspolicyoutlook.OnFriday,22August,BTCfellmorethan4.8 percent from the weekly open, sliding to new local range lows as investors de-riskedaheadofthemeeting.
However,thetoneshiftedsharplyfollowingsurprisinglydovishremarksfrom Fed Chairman Jerome Powellʼs speech,with risk assets sharply rebounding, triggeringabroad-basedshortsqueezeacrossdigitalassets.
Ether led the move, surging to reach a new all-time high of $4,958.70 on 24 August,underscoringitsrelativelynewroleasaliquiditydriverforinstitutional markets.
The coming week will now hinge on whether spot inflows, particularly from institutionsandtreasurycompanies,continues.Asustainedpickupindemand couldsustaintherally,whilemutedinflowswilllikelyseepriceactionrevertto range-boundconditionsassupplyanddemandstabilises.
Figure1.BTC/USD4Hchart.(source:Bitfinex)
CapitalinflowsintoBTChavecontinuedtosoften,despitetheformationofanew all-timehighat$123,640on14August.Thiscoolingindemandunderscoresthe moremeasuredappetitefrominvestorsatthisstageofthecycle.
Last week, risk-off positioning into the Jackson Hole symposium saw BTC sink to $111,990 and ETH to $4,209.80, coinciding with renewed weakness in US spotETFflows.
FarsideUK
BTCETFsrecorded$1.18billioninnetoutflowsovertheweek,whileEtherETFs registered$197millioninoutflowsjustlastMondayalone—thesecond-largest dailyexitforETHETFsonrecord.
Figure2. USBasedETFsBitcoinNetFlowsAcrossMajorProviders.
Importantly, ETH treasury companies have stepped in to absorb a substantial portion of this selling pressure, mitigating broader downside risk. While precise data is not yet fully disclosed, preliminary estimates suggest institutional treasurydemandhasprovidedmeaningfulsupport.
ETFflowshavebecomethemarginalbuyer/sellerforbothBTCandETH.Aftera strongrunofJuly–earlyAugustinflows,thependulumswungtheotherwaylast weekandintoMonday,amplifyingpricesensitivityinathinorderbook.However, thisweaknessinflowsusuallydoesnotlastformorethanamonthatatimeand historically,allETFsacrossriskassetsaswellassafehavenslikeGold,typically slowdowntowardstheendofSummerinAugust/September.
Last week, markets looked to be on a strong footing after Federal Reserve Chairman Jerome Powell signalled at Jackson Hole that the “balance of risksˮ hadshifted,leavingthedooropenforratecutsasearlyasSeptember.Equities ralliedsharply,ledbytechnologylargecaps,whilecryptoassetsfollowedwitha broad-based surge. Alongside ETH reaching fresh all-time highs, Solana also climbedabovethe$200level,reaching$212.60,astheentiredigitalassetclass pushed higher in lockstep with stocks, underscoring the tightening correlation betweenthetwomarkets.
Institutional inflows into ETH remain relentless. Sharplink Gaming SBET) added another 143,593 ETH to its holdings, Bitmine Immersion Technologies BMNR overtook MARA Holdings MARA) to become the second-largest digital asset treasury,andBTCSIncBTCS)announcedaone-time“BividendˮinETH.BMNR, GalaxyDigital,andothercorporatetreasurieshavealsoacceleratedthepaceof theiraccumulation,furthersolidifyinginstitutionalsupportfortheassetclass.
On-chain, ETH treasury balances now exceed $10 billion, with daily transactions approaching record levels. This persistent activity has helped offset ETF-driven sell pressure, and on a net basis, Ethereum ETFs are now firmly outpacingBitcoinproducts.Network development also continues to advance, highlighted by DBS Bank announcing the issuance of tokenised notes on Ethereum.
Technicaldriversunderpinningdigitalassets
The broader liquidity backdrop remains highly supportive of the digital asset classbutnuancesremain.
The combined M2 money supply of the four major central banks - the Federal Reserve,EuropeanCentralBank,BankofJapan,andPeopleʼsBankofChina,has expandedtonearly$100trillion(seechartabove).Whiletheyear-on-yeargrowth rate fluctuates with tightening cycles, the structural trend in global liquidity is unambiguously upward. For risk assets such as crypto, this dynamic reinforces the role of global M2 money supply as the ultimate “master variableˮ, one that continuestounderpinthelong-termbullishcasefordigitalassets.
FollowingtheformationoftheBTCATHhowever,theassethas lostitsupward momentum, retracing to a low of $111,190 (at time of this reportʼs publication), a decline of over 10 percent, driven by noticeably weaker capital inflows as investorsappearreluctanttocommitfreshcapitalathigherlevels.
When comparing the present pace of inflows with prior all-time high breakouts, thedifferenceisstark.DuringtheMarchandDecember2024ATHs,therealised cap-whichmeasuresthevalueofeachcoinsinceitwaslastmoved-expanded atamuchfasterrate.Thelate-2024breakoutabove$100,000sawarealisedcap rising at 13 percent per month, whereas the current move has peaked at a far moresubdued6percentpermonth.
Figure3.GlobalM2MoneySupply.Source:MacroMicro)
This slowdown in realised cap growth underscores a softer appetite for risk at this stage of the cycle. While capital inflows remain positive, the muted trajectory reflects a more cautious investor base, contrasting with the aggressivedemandthatcharacterisedpreviousATHsurges.
All signals currently point to a healthy longer timeframe market backdrop, with BTCconsolidatingatpresentlevelswhilecapitalinflowsgraduallyextendfurther alongtheriskcurve.InitiallyintoETHand,induecourse,acrossabroadersetof altcoins.
ForBTCspecifically,weexpectpriceactiontoremainrange-boundforawhile longer, even as ETH continues to attract heightened institutional demand mirroring the dynamic observed with BTC in early to mid-2024. Altcoins are beginning to see rotating liquidity flows, though we believe more significant capitalrotationintohigher-riskassetswillonlyemergelaterinthecycle.
We do not anticipate a “rising tide lifts all boatsˮ environment until later in the year,wheninflowsintoBitcoinproductsregainmomentumandnewinvestment vehicles for altcoins are introduced. These products are likely to generate sustained, price-agnostic demand, creating the conditions for a broader re-ratingacrossthedigitalassetcomplex.
Figure4.BitcoinRealisedCapNetPositionChange.Source:Glassnode)
PowellʼsJackson HoleSpeech: MarketsCheer, but
RisksLinger
FederalReserveChairJeromePowellʼsspeechattheJacksonHoleEconomic Policy Symposium last Friday, August 22nd, sent markets into a rally, as investorsinterpretedhisremarksasaclearsignalofaratecutinSeptember. Yet beneath the optimism lies a more complex reality: Powell reiterated the Fedʼs dual mandate of price stability and maximum employment, underscoring tensions that could limit how far the central bank is willing to easepolicy.
In what could possibly be his final Jackson Hole address as Fed Chair, Powell acknowledged that the “baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.ˮ His phrasing was widely seen as confirmation that the Federal Reserve is ready to cut rates at its September meeting. However, he stopped short of explicitly committing to do so, leaving thepossibilityopenforaone-timeadjustmentdependingonincomingdata.
Figure5.USNonfarmPayroll,MonthlyandAnnualChangeChartSource:Macromicro)
The August jobs report, due on September 5, will be pivotal. Powell pointed to signs of a cooling labour market, noting both a decline in labour supply and reduceddemandforworkers—anunusualcombinationthatsuggestsrisingrisks to employment. If job creation, represented by a monthly change in nonfarm payrolls,fallsbelow50,000,theFedmayfeeljustifiedincuttingrates.Butshould hiring stabilise between 50,000 and 100,000 per month, further easing will be difficult to defend, especially as inflation remains stuck above the Fedʼs two percenttarget.
ThismarksasignificantshiftinhowtheFedsetsitspolicy.Foryears,thecentral bankallowedinflationtorunabovetargetifitmeantkeepingemploymentstrong. Powell is now signalling a more balanced stance: inflation rising above the two percent goal will be treated just as seriously as falling below it. In effect, this givestheFedaslightlymorehawkishtilt,meaningthatevenifaratecuthappens soon,marketsshouldnotexpectareturntotheultra-lowrateenvironmentofthe pastdecade.
Markets, however, were quick to embrace the dovish tone. US Treasury yields dropped, with the two-year yield falling about 10 basis points to 3.69 percent, whileequitiessurged.TheDowJonesIndustrialAverageclosedatarecordhigh, theS&P500rose1.47percent.TheCMEFedwatchtoolnowseesa87.3percent chanceofaratecutinSeptember,upfrom64percentonemonthago.
Figure6.S&P500IndexSource:Tradingview)
Enthusiasm is being tempered however by the risk of stagflation, an environmentwhereweakgrowthcollideswithstubborninflation.Producerprice pressures reported for July reignited worries that inflation may prove more durablethanexpected,limitingtheFedʼsabilitytosustainaneasingcycle.
Beyond the data, political dynamics are adding complexity. Powellʼs address cameamidrenewedpressurefromtheWhiteHousetoaccelerateratecuts.US President Donald Trump has openly criticised the Fed and even targeted Fed Governor Lisa Cook, raising questions over the institutionʼs independence. Powell,forhispart,reiteratedthattheFedmaintainsadata-drivenapproachto determining monetary policy, but concerns about political interference are now partofthebackdrop.Althoughmarketsaretradingonexpectationsofratecuts, therealeconomycontinuestofacestructuralheadwinds.
Ultimately, Powellʼs Jackson Hole speech reassured markets in the short term, butitalsounderscoredthedifficultbalancingactahead.TheFedisattempting tocushionaweakeninglabourmarketwithoutlettinginflationexpectationsslip out of control. Whether September marks the start of a sustained easing cycle—ormerelyasymbolicnodtolabourmarketweakness—willhingeondata in the coming weeks. Investors, policymakers, and households alike should be preparedforapaththatisfarlessstraightforwardthantheinitialmarketreaction suggests.
Figure7.TargetRateProbabilitiesforSeptember17FedMeeting
USHousing MarketShows Resilience,but BroaderEconomy FacesInflation Pressures
The US housing market showed a surprising uptick in new construction last month,butaffordabilitychallengesandsupplyconstraintscontinuetocasta long shadow over the sector. At the same time, fresh data on US business activity points to stronger momentum in both manufacturing and services. Together, these developments highlight the difficult backdrop facing the FederalReserve:evenasChairmanJeromePowellsignalledatJacksonHole thataSeptemberratecutislikely,resilientdemandandrenewedinflationary pressuresmaylimithowfartheFedcaneasepolicy.
According to the Monthly New Residential Construction data for July, housing startsrose5.2percenttoanannualisedpaceof1.43millionunits.Theincrease was fueled by multifamily construction, which surged nearly 10 percent to a 489,000-unit rate, the strongest level since mid-2023. Single-family starts, which make up the bulk of the market, advanced 2.8 percent to 939,000 units butremain4.2percentloweronayear-to-datebasis.
Permits, a key indicator of future building activity, were less encouraging. Overallpermitsfell2.8percenttoa1.35million-unitrate,thelowestinfiveyears. While single-family permits edged up 0.5 percent to 870,000 units, multifamily permitsdroppednearly10percent,signallingpotentialweaknessahead.
Figure8.NewResidentialConstructionSource:USCensusBureau)
Thisreflectsgrowingbuildercaution,asdemandremainsconstrainedbyhigh financingcostsandslowinghouseholdformation.
Mortgage rates continue to play a central role in shaping demand. The average 30-year fixed mortgage rate recently dipped to 6.58 percent, its lowest since October, but still sits well above the levels seen during the pandemic era when borrowing costs were historically low. Elevated mortgage rates, combined with still-highhomeprices,havesidelinedmanypotentialbuyers.
Figure10.S&PGlobalCompositePMIOutput
Figure9.USMortgageRatesSource:FreddieMac)
Beyond housing, the broader US economy is sending mixed signals. According to S&P Globalʼs flash PMI survey released on Thursday, August 21st, overall business activity strengthened in August, with the composite index rising to 55.4, its highest since December. Manufacturing drove the improvement, with newordersclimbingatthefastestpacein18monthsandthesectorʼsPMIrising sharply to 53.3 from Julyʼs 49.8. Services activity also remained in expansion, thoughiteasedslightlyto55.4from55.7.
However, the survey also highlighted the emergence of building inflationary pressures. Input costs for businesses rose at the steepest rate since May, largely due to tariffs, while selling prices for goods and services surged to a three-yearhigh.Ineffect,companiesareincreasinglypassinghighercostsonto consumers.Employmentshowedsomestrength,withthecompositejobsindex reaching52.8,itshighestsinceJanuary.
On one hand, housing activity has found some short-term support from multifamily construction and slightly lower mortgage rates. On the other hand, affordability challenges and regulatory headwinds continue to weigh on single-family construction. Meanwhile, the broader economy is showing stronger growth momentum—but also renewed inflationary pressures, complicatingtheFederalReserveʼspolicypath.
The US is showing an economy where resilience and vulnerability coexist: housingstrugglestomeetlong-termdemand,businessesexpandbutfacerising costs, and consumers remain squeezed. For policymakers, this underscores a difficult balancing act of supporting growth without allowing inflation to reaccelerate.
Figure11.S&PGlobalCompositeOutputPricesSurgedtoaThree-YearHigh
ThailandʼsTourismRevivalvia TouristDigiPay:
Crypto-to-Baht
Pilot IgnitesFintechInnovation
● Thailand is launching TouristDigiPay, an 18-month pilot (starting Q4 2025) that lets tourists convert crypto into baht via regulated e-wallets, with strict KYC checks and spending caps to curb money laundering.
● Theprogramaimstorevivetourismandboostspending,withofficials estimatingapotential175bnbahteconomicliftiftouristoutlaysriseby just10percent
In response to a sharp downturn in tourism, Thailand has launched “TouristDigiPay,ˮ an 18-month pilot programme that enables foreign visitors to convertcryptocurrenciesintoThaibahtforseamlesslocalspending.According to an announcement last Monday, August 18th, this financial innovation, set to begin in Q4 2025, operates within a tightly regulated sandbox involving the Ministry of Finance, the Securities and Exchange Commission SEC, the Anti-Money Laundering Office AMLO, the Bank of Thailand, and the Ministry ofTourismandSports.
UnderTouristDigiPay,touristsmustregisterwithlicenseddigitalassetplatforms andundergostringentKnow-Your-CustomerKYC)andcustomerduediligence checks managed by AMLO. Funds converted from crypto are transferred into dedicated e-wallets, from which transactions in baht can be executed via QR code—apaymentprocesstransparenttomerchants,whoreceiveonlybahtand neverhandlecryptocurrencydirectly.
To mitigate risks such as money laundering, the programme enforces strict spending limits. While sources vary slightly, conversion caps are set at approximately 550,000 baht US $16,950) per tourist, whereas monthly payment thresholds stand at 500,000 baht for merchants cleared via “Know-Your-Merchantˮchannels,and50,000bahtforsmallervendors.
The initiative is strategically targeted to reverse the tourism slump—foreign arrivals in early 2025 fell significantly, prompting a revision of the annual forecast to 33 million, markedly below the 2019 peak of 39.9 million visitors andtheassociated1.91trillionbaht$59billion)inrevenue.Officialsanticipate thatenhancedconveniencewilldrivehigherspenderengagement:evena10% increase in tourist spending—estimated at an extra 5,000 baht per individual—couldcontributeanadditional175billionbahttotheeconomy
This programme sets Thailand apart as a global pioneer in crypto-tourism integration. By not accepting crypto directly at points of sale and funnelling transactionsthroughregulatede-moneysystems,itbalancesinnovativedigital accesswithrobustoversight.
SharpLinkʼsETHTreasurySurge: StrategicAccumulationDeepens
with143KCoinBuyatHighPrices
● SharpLink Gaming sharply expanded its Ethereum treasury, buying 143,593 ETH $667M) in one week, raising its total holdings to 740,760ETH$3.1B
● Despite staking rewards and a nearly 94 percent jump in ETH concentrationpershare,themovesparkedinvestorconcern
SharpLink Gaming Nasdaq: SBET, under its Ethereum treasury strategy, executedasharpexpansionofitsholdingaduringtheweekendingAugust17, 2025, purchasing an additional 143,593 ETH at an average price of approximately $4,648 per coin. This acquisition marked the most significant single-week addition yet by the company and elevated its total Ethereum holdingsto740,760ETH,valuedatover$3.1billion.
To finance this aggressive accumulation, SharpLinkraisedaremarkable$537millionin net proceeds for that week. This capital infusion came via a registered direct stock offering representing $390 million (closed August 11) and $146.5 million raised through itsat-the-marketATM)equityprogram.
Since initiating its treasury strategy on June 2nd, the company has also accrued 1,388 ETH in staking rewards, underscoring its comprehensiveapproachthatcombinesasset accumulationwithyield-earningefficiency.
Concurrently, SharpLinkʼs "ETH Concentration" metric—a key transparency indicatormeasuringEthereumholdingsper1,000dilutedshares—roseto3.87, anear94percentclimbrelativetoitsearlierbaselineinJune.
Despite these acquisitions, the company still has $84 million in undeployed cashreserves,signallingreadinessforfurtheracquisitionsifmarketconditions remainfavourable.
While the Ethereum bet is aggressive, investor sentiment has cooled. SharpLinkʼs stock price dropped between 12 and 14 percent following the disclosure—reflectingmarketconcernsoverexposuretoETHpriceswingsand accountingrealitiessuchasunrealisedlossesfromliquid-stakedEther.
CFTCExpands“CryptoSprintˮ InitiativetoAddressWiderPolicy Recommendations
● The CFTC is expanding its “Crypto Sprintˮ initiative, opening public comments until October 20, 2025, to shape rules on leveraged, margined,andretailcryptotradingbeyondspotcontracts
● Thenextphaseemphasisesinter-agencycoordinationwiththeSECon registration, custody, and recordkeeping, aiming to build a unified federalframeworkfordigitalassetmarkets
The US Commodity Futures Trading Commission CFTC) has entered a new phase of its “Crypto Sprintˮ initiative, broadening its focus to include additional recommendationsfromthePresidentʼsWorkingGrouponDigitalAssetMarkets.
In a statement last Thursday, August 21st, Acting Chair Caroline Pham announcedthattheagencywillbeginengagingwithindustrystakeholdersonthe remaining policy proposals, with public comments accepted until October 20, 2025. This follows the initiativeʼs first phase, launched on August 4th, which focused on enabling the trading of spot cryptocurrency contracts on registered futuresexchanges.
“The Administration has made it clear that creating a federal framework for digitalassettradingisatoppriority,ˮPhamsaid.Sheaddedthatfeedbackfrom the public will be critical in shaping how the CFTC approaches leveraged, margined,orfinancedretailcryptotradingonregulatedplatforms.
Thenextstageoftheinitiativeisexpectedtomovebeyondspottradingtocover
A key recommendation calls for closer alignment between the CFTC and the Securities and Exchange Commission SEC. The SEC has already launched its own initiative, “Project Crypto,ˮ with Chair Paul Atkins noting its desire to modernisesecuritiesregulationsandbringUSfinancialmarketsontoblockchain infrastructure.
