Good news, no bid

Macro

July's data made the case against a September hike, with CPI in line at 0.1% m/m, retail sales posting their steepest drop since May 2025 and Michigan sentiment badly missing estimates, so by Friday September hike odds had fallen from roughly even to near one-in-three. The market spent the week concluding the Fed is done, which makes it notable that almost nothing rallied on it.

Macro explains why nothing moved. Brent topped it at +7.91% as Hormuz deteriorated, equities barely held green with the S&P500 up 0.40% and the Russell 2k leading at +1.17%, while everything rate-sensitive finished red, 20Y+ Treasuries down 0.87% with BTC at the bottom at -3.12% and ETH at -1.82%. When falling hike odds cannot lift bonds or crypto, it confirms that the inflation problem seems to be moving from the Fed's hands to oil's.

Friday’s session was pretty telling as the weak data stopped buying rallies. The retail sales miss and the sentiment plunge landed alongside year-ahead inflation expectations rising to 4.3%, and the 10-year rose to 4.69% on the day, so a consumer that spends less while expecting to pay more pins the Fed between its mandates and takes away the reflex bond bid that soft prints used to earn.

In the Middle East, only five ships crossed the Strait of Hormuz on Saturday and none on Sunday, against 31 the prior weekend, with the 60-day ceasefire expiring today, talks stalled and Tehran's foreign minister saying the two sides have nothing resembling a ceasefire. Energy did most of the disinflation work in June and July, so a re-escalation that holds Brent near $89 puts the August CPI print at risk and with it the entire hold-in-September narrative.

Digital Assets

Roughly $390M left US spot BTC ETFs between Aug 10 and 14, the heaviest weekly redemption since June, with IBIT absorbing the brunt, while ETH funds finished near flat to snap a five-week inflow streak. The speed of the reversal says much of the early-August bid was opportunistic capital, and the structural re-engagement we wanted evidence of remains unproven.

BTC's 3.12% decline came in a week when hike odds collapsed and PPI cooled below forecasts, so the macro tailwind arrived and BTC ignored it, wiping out the prior week's rally and pressing the floor of the range it has built since June. An asset that cannot rally on good news while its dedicated vehicles bleed is telling us the marginal seller is back, which weakens the depletion argument we have been carrying since W31.

Riot's Q2 put a name and a size on that seller. The miner disclosed it sold 4,300 BTC during the quarter on top of 3,778 in Q1, taking its treasury down to 11,380 BTC, after an all-in cost near $91k to mine a coin worth under $64k drove a $237M quarterly loss. Riot won't be alone here, since network hashrate at record highs means the whole mining sector is producing coins above their market price, and miners bridge that gap either by selling treasury coins to cover costs or by selling them to fund the pivot into AI datacentre revenue, as Riot is doing with its 191MW leasing deal. Miner treasuries hold meaningful supply, and while production costs sit above price, it is natural to see some of it coming to market every quarter.

Solana ETFs attracted $10M for their best week since May, with XRP and Hyperliquid products also modestly positive, so the selling concentrated in BTC while the long tail of wrappers held their bid. That matches the select-token demand we flagged two weeks ago, though at these sizes it is a signal of interest and not yet a flow story.

The good news this week came from stablecoins, where KPMG completed the first full audit of Tether's financial statements with an unqualified opinion, reserves exceeding liabilities by $6.8B and the engagement extending to counting the gold. This opinion on Tether’s $180B liability stack will probably remove some reservation to settling over USDT rails from institutional and mainstream counterparties going forward.

Our take:

“The ETF bid lasted exactly one week, so we are not turning constructive, and the ceasefire expiry now sets the tape"

Last week we said we wanted the ETF bid and DAT activity to hold through the end of summer before turning constructive, and the first test failed inside five sessions, with $390M out and price back at the bottom of the range.

Patience is key, since positioning remains light enough that we see no reason to turn outright bearish either, but a market that cannot rally on collapsing hike odds needs its own demand story and this week it had none. The binary now sits once again outside crypto entirely, as the Hormuz re-escalation will feed the August inflation prints and take the September “hold” off the table. We continue to closely watch ETF flows here. Stabilization or sustained inflow are required before turning outright constructive.

Catalysts are the FOMC minutes on Wednesday 19 Aug and flash PMIs on Friday 21 Aug, then Jackson Hole on 27-29 Aug, with the ceasefire expiry playing out in headlines all week.