Market Commentary

INFLATION: CPI JOINS A TRIPLE SUPPLY-SIDE SQUEEZE

The week's data point was the August Consumer Price Index (CPI), released Friday. Headline inflation rose 0.4% on the month, putting the annual rate at 3.4%, in line with expectations. The relevant detail was in core — the measure that excludes food and energy, which the Fed watches for being more stable: it advanced 0.3% on the month, one-tenth above consensus, with the annual rate at 2.4%. It is not a dramatic surprise, but it is exactly the direction the Fed did not want to see days before deciding.

And it did not come alone. The same week brought two supply-side cost pushes. Brent oil rose close to 9% over five sessions to the USD 97–99 zone, after a re-escalation of the conflict between the U.S. and Iran around the Strait of Hormuz, the route through which much of the world's seaborne crude flows. And Canada's retaliatory tariffs on some USD 27,600MM in U.S. goods (rates of 15% to 50%) took effect Monday the 8th. Both are cost pressures that take time to filter into prices, but they push inflation higher just as the Fed seeks to contain it.

For Digital Assets, the implication is the one we had been anticipating, now reinforced. With August employment already known to be strong and core inflation holding above target, the price-side argument to keep rates high — or raise them — consolidates. The odds of a 25-basis-point hike at the September 16 meeting rose to ~62% (CME FedWatch), from ~50% the prior week; the probability of a cut is virtually nil. The Fed, moreover, arrives divided: the Cleveland Fed president openly argues for a hike, while Governor Waller and New York Fed president Williams prefer to hold. The "coin flip" we described last week landed on the restrictive side.

THE SEPTEMBER 15–16 WINDOW, NOW IN SIGHT

The macro sequence we had been tracking flows this week into its point of maximum concentration. Within 48 hours, two resolutions coincide: on Monday the 15th, at 2:15pm ET, the Senate votes on the CLARITY Act cloture motion — the market-structure framework for Digital Assets; and on Tuesday the 16th, the Fed announces its rate decision along with its updated dot plot (chart of member rate projections).

It is worth calibrating expectations on the regulatory front. The September 15 vote is procedural: it requires 60 votes to open floor debate, and with Republicans controlling 53 seats, at least seven Democrats would be needed. Prediction markets reflect skepticism — the probability the law passes within 2026 fell to ~16% — due to three unresolved disputes (ethics rules, developer liability, and a stablecoin-yield provision). Even if it clears cloture, the law would then require a floor vote, reconciliation with the House version, and a presidential signature. In other words: a positive result on the 15th would be a momentum signal, not passage; and a negative one, though expected, could weigh on sentiment.

Bitcoin (BTC): Trades around USD 77,500 (-2.5%), in a week in which it gave up the USD 78,000 support we had been watching as the priority level. Losing it matters for what lies below: it is the lower edge of the zone of heaviest buyer concentration, and beyond it supply thins out — there are few relevant accumulation levels down to the USD 68,000 zone — leaving BTC more exposed to a wide move if next week's volatility pushes it lower. To the upside, the reference remains twofold: the USD 80,000–83,000 resistance and the 50-week moving average (~USD 81,000), a level BTC has not closed above since late 2025 and which, historically, has marked the end of prior bear markets when reclaimed on a weekly close. Support at USD 77,000 and, below, USD 68,000; resistance at USD 80,000–83,000.

Ethereum (ETH): Trades around USD 2,570 (+4.9%), the best performance of the three assets and an extension of the relative edge we have been noting in its favor. ETH moved toward the upper part of the USD 2,500–2,650 zone that had capped it in prior weeks, in a move that coincides with a broader capital rotation: institutional interest has been diversifying from BTC toward ETH, reflected in a rising ETH/BTC ratio. It is a signal of appetite for greater "beta" (sensitivity to the cycle) within Digital Assets, rather than risk aversion. Support at USD 2,450–2,500; resistance at USD 2,650–2,800.

Solana (SOL): Trades around USD 102.00 (+1.0%), stabilizing after the prior week's correction. It holds solidly above USD 100, with its ETFs again in positive territory, though modestly. The price action of the last two weeks — controlled correction followed by stabilization — is that of an asset digesting its recent advance without undoing it. Support at USD 96–99; resistance at USD 107–110.

Market structure held the pattern of recent weeks: speculative leverage stayed contained and was not the engine of the move. Funding rates (the cost of holding leveraged long positions) sat around 4.7% annualized, well below the zones of excess optimism, and liquidations were limited, with no significant cascades.

That picture carries an important implication heading into next week: the market arrives at the FOMC without an accumulated excess of leverage to amplify a sharp move. Put differently, BTC's fall below USD 78,000 came through spot flow (the ETF withdrawal) — genuine positioning — and not through a forced unwind of leveraged positions. It is worth keeping one calendar element in mind, however: the end-of-month quarterly options expiry (~September 25) concentrates roughly 65% more open interest than the prior monthly one and lands just after the September 15–16 window, so it may add mechanical volatility once the Fed and CLARITY Act results are known.

The divergence between ETH and BTC is the most relevant microstructure of the week: while BTC gave ground with flows in retreat, ETH advanced with relative backing. Historically, a rising ETH/BTC ratio alongside a BTC dominance that stops growing has accompanied phases of greater appetite for assets other than BTC.

Expected volatility for the week ahead: very high. The September 15–16 dual catalyst — the CLARITY Act vote and the Fed decision with projections — concentrates two binary results within 48 hours: the quarter's highest expected volatility window, with the capacity to move the market forcefully and in either direction.

Note: Monday the 7th was a U.S. holiday (Labor Day) and markets traded Tuesday through Thursday.

BTC: -USD 449.50MM, the first clearly negative weekly print in several weeks, with outflows on all three days — USD 46.60MM, 120.20MM, and 282.70MM — at a pace that accelerated into Thursday. The contrast is stark: last week these same vehicles captured a record USD 730.80MM in a single day. It confirms our prior read: demand for BTC is real, but it has not committed; it enters on constructive headlines and retreats in the face of risk. At the gates of the FOMC, the pullback is consistent with reducing exposure ahead of a binary event, rather than a change in thesis.

ETH: -USD 19.50MM, essentially flat on net, with an outflow Tuesday (-24.30), an inflow Wednesday (+34.70), and another outflow Thursday (-29.90). Against BTC's clear withdrawal, ETH held up better — consistent with its superior price performance — and shows the relative-allocation signal in its favor remains in place even in a week of risk reduction. Institutional backing for ETH continues to be the firmest of the three in relative terms.

SOL: +USD 10.00MM, the only one of the three with a clearly positive flow, concentrated in a USD 11.20MM inflow Wednesday via Bitwise's BSOL. It is a modest inflow, but notable for running against the general pullback: it suggests the institutional interest that began to emerge in SOL in prior weeks has not dissipated. It is worth continuing to watch to gauge whether it consolidates as a structural allocation.