Bitcoin’s inflation story just got more complicated. The bond market’s inflation expectations had dropped below the Fed’s 2% target — a bullish signal — but U.S. consumers are now expecting inflation at 3.7% over the next year, the highest reading since September 2023. Then the ceasefire collapsed. Trump told NATO leaders it’s “over,” after the U.S. struck more than 60 IRGC boats in the Strait of Hormuz and Iran retaliated against Kuwait and Bahrain. Oil surged more than 5%. Bitcoin fell back to $62,000. The CoinDesk 20 dropped 2.9%. Altcoins took the worst of it — $350 million of the $450 million in total liquidations came from altcoin pairs. Marex says the FOMC minutes due today are the “pin” for overcrowded longs. Watch it.
Bitcoin sits at an unusually complex intersection of conflicting inflation signals. On one hand, inflation breakevens — the bond market’s forward-looking expectations — have dropped sharply and are at or below the Fed’s 2% target at the short end, weakening the case for further rate hikes and providing a tailwind for BTC. On the other hand, a Federal Reserve Bank of New York survey released Tuesday shows U.S. consumers expect inflation to reach 3.7% over the next year — the highest reading since September 2023 — and 3.3% over three years, the highest since June 2022. The Fed itself tends to trust breakevens over consumer surveys because they reflect institutional capital allocation, while survey respondents are frequently influenced by volatile everyday prices like gasoline and food. The case for falling breakevens being bullish for BTC still holds. But the central bank may not entirely dismiss Main Street sentiment, particularly if energy prices re-accelerate. And they just did. The U.S.–Iran ceasefire has collapsed. Trump told NATO leaders the ceasefire is “over” after the U.S. struck more than 60 IRGC boats in the Strait of Hormuz and Iran retaliated with attacks on Kuwait and Bahrain. Oil benchmarks jumped roughly 5%. BTC fell back to $62,000. The FOMC minutes from the June meeting are due later today — Marex analysts call it “the pin” for overcrowded longs, warning that a hawkish read could flush leverage on a market where longs are crowded and funding rates still elevated. Meanwhile, Japan’s yen sits near four-decade lows — around 162 per dollar — and hedge funds are the most bearish on the yen since 2007. SBI VC Trade reports that Japanese companies are accumulating BTC and XRP on their balance sheets to diversify reserves away from a depreciating currency.
Japan’s collapsing yen is pushing companies into bitcoin and XRP.
The yen is trading near its weakest level in four decades — around 162 per dollar — and Japanese companies are moving crypto onto their balance sheets to escape it. SBI VC Trade, the crypto arm of Tokyo-based SBI Holdings, reported Tuesday that corporate demand for BTC and XRP is climbing as the currency’s slide pushes firms to diversify reserves beyond cash. The exchange’s registered accounts have passed 2 million, roughly double its 2025 count, with growth driven in part by companies that distribute bitcoin or XRP through shareholder-perk programs. Hedge funds are the most bearish on the yen since 2007, having boosted short bets to nearly 138,000 contracts as of June 30 per CFTC data. The driver is the rate gap between a hawkish U.S. Fed and a Bank of Japan still far behind it — the same gap that makes holding yen cash a losing position and drives firms into harder assets. Meanwhile, South Korea’s Kospi has fallen roughly 20% from last month’s peak, entering a technical bear market, with SK Hynix and Samsung each down more than 5% Wednesday as AI-infrastructure spending doubts deepen. Bitcoin traded near $62,650 — down 0.6% on the day but still up 6.1% on the week. Robinhood Chain topped $100 million in total value locked just one week after its Arbitrum L2 debut, with $89.8 million held on Morpho powering the new Robinhood Earn product and $13 million on Uniswap. U.S. consumer inflation expectations hit their highest since September 2023, at 3.7% for the next 12 months per the NY Fed survey.
Crypto and stocks tumble after Trump declares the ceasefire ‘over’ following Iran strikes.
Crypto markets fell sharply Wednesday after fresh U.S.–Iran hostilities sparked a broad risk-off move. The CoinDesk 20 Index dropped 2.9% since midnight UTC, with all but one token declining. Trump told NATO leaders the ceasefire is “over” and called negotiating with Iran a “waste of time,” after U.S. Central Command hit more than 60 IRGC boats in the Strait of Hormuz and Iran retaliated with strikes on Kuwait and Bahrain. BTC and ETH each fell more than 2%. The Dollar Index (DXY) rose as reignited tensions stoked inflation concerns. Altcoins bore the brunt: $350 million of the $450 million in total liquidations came from altcoin pairs, with JUP, ETHFI and PUMP each losing more than 5%. Solana wiped out its entire July rally, trading back near $77 after hitting $84 on Monday. Nasdaq 100 and S&P 500 futures tumbled as much as 1.5%. On the derivatives front, BTC open interest fell from 740K to 730K BTC — suggesting traders are not aggressively shorting the decline. However, the one-week options skew on Deribit jumped to nearly 20% in favor of puts from 16% a day earlier, and implied volatility indexes BVIV and EVIV both rose for a second straight day. The only notable green token: MORPHO, up 4% as TVL on the Morpho protocol hit a record 4 million ETH. Several altcoins have also dipped back into oversold territory, with average RSI falling to 40/100 from 47/100 Tuesday — a level that has historically preceded short-term bounces.
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