Market Commentary

MAY PCE — 4.1% ANNUAL, FOURTH CONSECUTIVE ACCELERATION

The May PCE report (released Thursday June 25) confirmed what the market feared: inflation continues accelerating. Headline PCE printed 4.1% annually — the highest since April 2023 and the fourth consecutive acceleration. Monthly PCE was +0.4%, matching April. Core PCE rose to 3.4% annually (from 3.3%), its highest since October 2023, with a +0.3% monthly increase in line with estimates.

The data's composition reveals a concerning dynamic: services accelerated to +0.5% monthly (from +0.3%), while goods decelerated to +0.4% (from +0.7%). Personal spending rose +0.7% monthly, beating the +0.6% consensus — signaling the American consumer keeps spending despite elevated prices.

The implication for Digital Assets is direct: the data reinforces Warsh's hawkish dot plot projections (9 of 18 officials project hikes) and eliminates any residual rate cut expectations for 2026. BTC, as a non-yielding asset, faces a rising opportunity cost environment against Treasuries and cash.

IRAN MOU — PROGRESS IN SWITZERLAND, BUT FRIDAY INCIDENT ADDS UNCERTAINTY

MOU implementation talks at the Bürgenstock summit (Switzerland, Jun 21–22) had a tense start — Trump threatened to "hit Iran very hard again" while Vance negotiated, causing a temporary Iranian pause — but concluded Monday with what mediators Qatar and Pakistan called "encouraging progress." Concrete outcomes included: a roadmap toward a final deal within 60 days, the creation of a High-Level Committee for technical negotiations, a communication line for safe vessel passage in the Strait, and a "deconfliction cell" for Lebanon mediated by Qatar and Pakistan. Iran agreed to invite IAEA inspectors back into the country — a significant milestone. Vance declared "significant progress" and said he felt "great" about the advances.

However, implementation faces persistent challenges. Israel continues operations in southern Lebanon despite the MOU's cessation of hostilities clause, and Netanyahu declared Israel will maintain a "security zone" under military control. On Friday June 26, Iran fired 4 attack drones at a cargo vessel in the Strait of Hormuz, impacting the upper deck — a direct violation of the 60-day ceasefire extension. GCC foreign ministers issued a statement demanding any final deal include limitations on Iran's missile capability.

EQUITIES & OIL

The Nasdaq fell -1.8% Tuesday on AI infrastructure CAPEX concerns, generating risk-off sentiment that extended to Digital Assets. Oil remains in the mid-USD 80s/bbl but uncertainty over effective Strait reopening limits the price normalization the market needs to decelerate headline inflation.

Bitcoin (BTC): Trades around USD 60,074, returning to the USD 60,000 zone it had defended in Week 23. The confluence of hawkish PCE, geopolitical uncertainty and the month's largest ETF outflow session (-691.70MM Thursday) pushed BTC to retest this critical support. Support at USD 58,000–60,000; resistance at USD 63,000–65,000.

Ethereum (ETH): Trades around USD 1,578, with the week's largest percentage decline (-7.1%). ETH shows greater sensitivity to risk-off episodes, amplifying BTC's moves. ETFs posted -USD 260.70MM, with BlackRock's ETHA accumulating -USD 223.60MM. The Ethereum Foundation announced a significant restructuring this week: 54 roles eliminated and a 40% budget cut. While generating short-term noise, the reorganization seeks leaner operations — consistent with a network whose usage metrics remain near ATHs. Support at USD 1,500–1,550; resistance at USD 1,650–1,700.

Solana (SOL): Trades around USD 72.30, leading the market at +5.0% — the only asset of the three in positive territory. This divergence is notable: while BTC and ETH declined, SOL advanced. ETFs were marginally negative (-USD 1.90MM net including Friday's +2.00MM). SOL continues exhibiting its own dynamic, with a higher-beta-to-upside profile attracting differentiated capital. Support at USD 68–70; resistance at USD 75–78.

The week produced another round of significant liquidations. Wednesday and Thursday combined generated over USD 1,000MM in liquidations, with approximately USD 780MM from long positions. BTC briefly retested below USD 60,000 before recovering.

This week's dynamic reflects a market that remains sensitive to the confluence of negative macro data and geopolitical headlines. Funding rates fell to negative territory Thursday after the PCE, indicating renewed bearish positioning. Implied volatility rose from ~52% at the start of the week to ~58% at the close.

BTC: The outflow deceleration observed during Weeks 24 and 25 reversed abruptly: -USD 1,342.80MM in 4 sessions. The progression accelerated: Mon -68.30 → Tue -113.80 → Wed -469.00 → Thu -691.70MM. Thursday posted significant outflows: IBIT -265.70MM and FBTC -274.50MM leading outflows. The confluence of hawkish PCE and geopolitical uncertainty triggered aggressive institutional de-risking. MSBT was again the only fund with positive inflows all four sessions (+26.20MM cumulative), confirming that the most specialized long-term capital continues accumulating at these levels.

ETH: -USD 260.70MM, significant outflow acceleration. BlackRock's ETHA concentrated -USD 223.60MM. Outflows were consistent across all four days. The Ethereum Foundation restructuring and price weakness below USD 1,600 likely amplified selling pressure.

SOL: Marginally negative (-USD 1.90MM net including Friday). Thursday posted -3.90MM (BSOL), but Friday +2.00MM (BSOL +2.00). SOL maintains differentiated dynamics versus BTC and ETH.