The early-week strength was fueled by trade and monetary factors. Investors leaned on digital assets as a store of value amid the risk of a fresh U.S.–China flare-up. A 90-day tariff moratorium was set to expire Tuesday without a finalized accord, and analysts warned that reciprocal duties north of 100% could all but halt goods flows and aggravate a global slowdown. At the last minute, higher tariffs were pushed out to mid-November, giving both sides more time to negotiate. The U.S. dollar, meanwhile, came under pressure on rising odds that the Federal Reserve could cut rates by 50 bps in September, following a softer July labor print and cooler inflation (CPI 2.7% vs 2.8% expected). Sentiment was also swayed by the expected appointment of Stephen Miran—viewed as a policy dove—to the Fed’s Board of Governors.
Thursday’s Producer Price Index changed the tone. Headline PPI accelerated to 3.3% y/y from 2.4% (vs 2.5% expected), with core at 3.7%. With inflation still running hot, the window for near-term rate relief narrowed, undercutting “dovish” bets and prompting a broad crypto pullback. Adding to the chill, Treasury Secretary Scott Bessent said the U.S. would build a strategic Bitcoin reserve only from already seized coins—valued around $15–20 billion at current prices—ruling out new government purchases. He later clarified that “budget-neutral” acquisition paths are being examined, but the initial remarks still dented risk appetite.
Even so, most analysts don’t view this downdraft as entrenched. Investor optimism remains elevated on the idea that ongoing trade uncertainty can support crypto’s “safe-haven” bid, while clearer legal rails—now being shaped by the U.S. administration—could further broaden adoption.
ETH led the week’s gains. The token has been in a sustained uptrend for months, strengthened since the SEC’s May decision not to treat staking on Proof-of-Stake networks as a securities transaction. That stance notably amplified institutional interest in ETH as both a treasury asset and a yield vehicle. On Monday, Ethereum ETFs recorded their largest single-day inflow ever at $1.018 billion.
Bottom line: despite the correction, institutional confidence remains firm. That could slow the market’s decline—or even set up a turn higher—into next week.