Market Commentary

WARSH IN SINTRA — "INFLATION RISKS HAVE COME DOWN"

On Wednesday July 1, Warsh participated in the ECB's annual Forum on Central Banking in Sintra, Portugal — the most prominent gathering of central bankers each year. His remarks marked a tone shift from the hawkish FOMC on June 16–17. Warsh stated that "expectations of inflation over the first four weeks of this period have come down, inflation risks have come down," attributing part of the improvement to energy prices falling "quite substantially" since the U.S.-Iran MOU signing. "They're still a bit above where they were pre-conflict, but they've come down," he added.

However, Warsh was clear on two points: first, the 2% target is non-negotiable — "if there were people who thought this central bank was going to be comfortable with an inflation objective above 2%, well, they'd be disappointed." Second, he offered no forward guidance on what the Fed will do at its next meeting (Jul 28–29), declaring he wants "a good family fight" when the committee meets in four weeks. The 2-year Treasury yield fell to 4.15% after his remarks — signaling the market read the tone as less restrictive than anticipated.

JUNE EMPLOYMENT — 57,000, WEAKEST IN FOUR MONTHS

The June jobs report (released Thursday July 2) showed the U.S. economy created just 57,000 nonfarm payrolls (non-agricultural jobs) — well below the 115,000 consensus and the weakest figure in four months. Prior months were revised significantly lower: April dropped -31,000 to 148,000 and May -43,000 to 129,000, implying 74,000 fewer jobs than originally reported. The unemployment rate fell to 4.2% (from 4.3%), but the improvement was driven by a labor force contraction (-720,000 people) rather than actual hiring.

The implication for Digital Assets is direct: a cooling labor market reduces the Fed's urgency to hike rates. Citizens analysts noted markets are "already repricing a lower likelihood of Fed tightening." Kiplinger called the data evidence that the Fed's decision to hold rates in June "looks less like a policy mistake and more like prudent patience." This was the direct catalyst for Thursday's ETF flow reversal.

OIL & ENERGY — BRENT TOUCHES USD 71 BEFORE RECOVERING TO USD 72.30

Brent touched below USD 71/bbl Thursday — its lowest since February — before recovering to ~USD 72.30 on Friday (+0.6%). Oil shipments through the Strait of Hormuz exceeded 10 million barrels per day this week, with UAE restoring exports to pre-war levels (3.9M bpd), Saudi Arabia at 90% of pre-war capacity (6.3M bpd), and Kuwait ramping production from 580,000 to 1.65M bpd in June. Iranian exports surpassed 40 million barrels after the naval blockade was lifted. Warsh cited falling oil as a factor behind moderating inflation expectations. ECB's Lagarde agreed in Sintra. Upcoming peace talks in Qatar face a delay due to Khamenei's funeral, beginning July 4.

Bitcoin (BTC): Trades around USD 62,150, recovering +3.5% after Week 26's declines. The convergence of Warsh softening his tone and weak employment data drove a reassessment of hike risk. BTC remains in a consolidation zone where June's selling pressure has exhausted considerably, but confirming a trend reversal requires breaking resistance with sustained volume. Support at USD 60,000–61,000; resistance at USD 63,800–65,000.

Ethereum (ETH): Trades around USD 1,730, with the week's largest percentage recovery (+9.6%). ETH benefited disproportionately from improving risk appetite. ETFs closed nearly flat (-USD 13.70MM), but the last two days were positive (+14.80 and +29.00MM), with BlackRock's ETHA posting +36.60 and +29.70 respectively — signaling the largest institutional allocators are returning at this price range. Support at USD 1,650–1,700; resistance at USD 1,800–1,850.

Solana (SOL): Trades around USD 81, leading the recovery at +12.0%. SOL continues exhibiting the ecosystem's highest beta (sensitivity to market movements), amplifying upside moves. ETFs posted +USD 5.70MM with 3 of 4 positive sessions. SOL has advanced ~25% from Week 23's lows. Support at USD 75–78; resistance at USD 83–85.

This week's derivatives structure reflects a relevant transition. Funding rates (the cost leveraged investors pay to maintain open positions in perpetual contracts) shifted from negative territory — where they had been for most of June — to neutral and slightly positive toward the week's close, indicating a healthier equilibrium between long positions (bets on price increases) and short positions (bets on price decreases).

Per Glassnode's weekly report ("Accumulation Beneath the Surface," published this week), positioning on Hyperliquid (one of the leading decentralized derivatives platforms) shifted decisively toward the long side, reaching its highest level in the observed period. This creates an asymmetric structure: if buyers regain control, the concentration of long positioning could fuel an accelerated recovery. However, if support fails, those same positions could amplify the decline through forced liquidations.

Dealer gamma positioning (institutional operators who manage options risk) has become increasingly supportive around the USD 60,000 zone: their hedging flows are dampening volatility and encouraging price stabilization. Glassnode notes the options market is "no longer positioned for an acceleration lower" — a constructive reading.

A relevant on-chain data point from the same report: LTHs (Long-Term Holders — investors who maintain their positions for extended periods) continue accumulating BTC, while ETF investors withdraw capital. This divergence between "patient on-chain capital" and "price-sensitive institutional participants" is significant — and Thursday's flow reversal (+USD 223.50MM) is exactly the signal Glassnode identified as confirmation that institutional confidence is beginning to recover.

Liquidations declined versus prior weeks, signaling that the excess leverage that made the market vulnerable during June has been largely purged. Expected volatility descended from ~58% to ~50% — still elevated, but directionally constructive. Unlike previous relief bounces (April and mid-June), this week's catalysts are structural (weak employment + falling oil + Warsh acknowledging moderation), not just passing headlines.

BTC: The weekly net closed at -USD 526.10MM, but the real story was Thursday: +USD 223.50MM, breaking a 10-session consecutive outflow streak. CoinDesk called it "the strongest inflow day in two months." The first three days maintained consistent outflows (Mon -231.00, Tue -222.60, Wed -296.00), reflecting June's inertia. Thursday, weak employment data and Warsh's tone acted as catalysts for institutional re-entry, led by FBTC (+166.00MM) and ARKB (+91.80MM) — not IBIT, which signals broader participation. June closed as the worst BTC ETF month since their January 2024 launch (~USD 4.5B in net outflows). Multiple analysts, including Investing.com, characterize this as a cyclical capitulation floor — not a structural collapse in the investment thesis.

ETH: Essentially flat (-USD 13.70MM), with progressive improvement: the first two days were negative (-29.90, -27.60), but the last two were positive (+14.80, +29.00). BlackRock's ETHA posted +36.60 and +29.70 in the last two sessions. The broad fund participation in positive sessions signals coordinated institutional repositioning.

SOL: Third consecutive week with net positive flows (+USD 5.70MM). Bitwise's BSOL led with inflows in 3 of 4 sessions. SOL consolidates its position as the asset with the most constructive flow dynamic in the ecosystem.

Metaplanet (Japan) purchases 2,823 BTC on July 2: The Tokyo-listed firm raised its holdings to 43,000 BTC, consolidating as one of the largest corporate BTC treasuries outside the U.S. The purchase was made despite a 41% drop in the company's BTC-linked revenue — signaling that corporate accumulation continues regardless of short-term price pressure.