The sector remains under pressure from growing uncertainty over the Federal Reserve’s next steps: labor market cooling alongside accelerating inflation makes it difficult for officials to choose a clear policy path. Inflation may be recognized as the greater threat to the economy, and combating rising prices does not involve monetary easing or weakening of the U.S. dollar, as was implied in the minutes of the Fed’s August meeting. In addition, board members acknowledged persistent uncertainty over the timing, scale, and duration of the impact from the White House’s tariff increases. July data confirmed this pressure, with producer prices rising from 2.4% to 3.3% YoY and the core indicator from 2.6% to 3.7%. Thus, the scenario of the Fed refusing to cut rates this year appears realistic, weakening alternative assets to the dollar. Against this backdrop, there has been a significant outflow of funds from digital exchange-traded funds (ETFs) and an overall deterioration in trader sentiment, as reflected by the “fear and greed” index slipping into the “fear” zone, although it has since recovered to neutral at 50.0. At 16:00 (GMT+2), markets await comments from Fed Chair Jerome Powell at the Jackson Hole symposium, which could trigger notable price moves. If Powell hints at a possible rate adjustment in September, as some analysts hope, alternative assets — including digital currencies — may gain support; otherwise, sector weakness will likely persist.
Despite the current correction, the long-term fundamental backdrop remains favorable: demand for safe-haven assets continues, and the U.S. government’s commitment to clear regulatory frameworks for the digital market could attract more large-scale businesses. Moreover, the “dovish” stance of President Donald Trump’s administration has already begun to positively influence other countries’ policies toward the crypto sector. According to Reuters, China is considering allowing the use of yuan-backed stablecoins to encourage broader global adoption of its currency and reduce its lag behind the U.S. in this area. Notably, just a few years ago, China was a recognized leader in the crypto industry before imposing heavy restrictions on trading, mining, and token development. Reports suggest that by the end of this month, Beijing will review a “roadmap” aimed at expanding the yuan’s global use, with stablecoin development expected to play a key role. If these measures are approved, a new major player will enter the digital asset market, driving further sector investment growth.
Overall, in the short term, monetary factors continue to exert downward pressure, which may lead to further declines next week.