Firi Weekly: Crypto Falls on U.S. Macro Weakness

Jobs Miss Triggers Selloff:
- The U.S. added only 73,000 jobs versus the expected 100,000, and major downward revisions reveal economic weakness. In response, Trump fired the head of labor market statistics.
Tariffs and Yields Signal Trouble:
- Trump’s new tariffs hit 60+ countries as U.S. bond yields plunge on recession fears, fueling market decline.
SEC's Crypto Revolution:
- New SEC chairman unveils "Project Crypto" to make America the crypto capital, promising tokenized stocks and updated custody rules.
ETF Records Before High Outflows:
- July saw $6 billion in Bitcoin and a record $5.43 billion in Ethereum ETF inflows, before August 1st marked the second-largest outflow day for both so far in 2025.

Last Week’s Big Three

U.S. Labor Market Crumbles: Friday's U.S. jobs report from the Bureau of Labor Statistics (BLS) exposed severe economic weakness. The 73,000 jobs added in July badly missed expectations, but the real shock came from massive downward revisions. May's jobs gain shrank from 144,000 to just 19,000, while June collapsed from 147,000 to 14,000.

The dismal data prompted President Trump to fire BLS Commissioner Erika McEntarfer, after which he accused her on social media of rigging the numbers to hurt Republicans. Markets interpret the hiring freeze as evidence that Trump's tariff threats and immigration crackdowns are paralyzing business investment. Risk assets, especially tech stocks and crypto, plunged on the news.

Coinbase Earnings Disappoint: America's largest crypto exchange missed second-quarter revenue expectations Thursday, reporting $1.5 billion versus the $1.59 billion consensus. While net income reached $1.43 billion, most came from crypto appreciation and the initial public offering (IPO) of Circle, issuer of the USDC stablecoin.

Coinbase shares tumbled 16.7% on Friday following the disappointing results, potentially dragging crypto sentiment even lower.

SEC's Pro-Crypto Pivot: In stark contrast to the market gloom, U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins unveiled "Project Crypto" Thursday, outlining plans to restore U.S. crypto leadership. The initiative builds on recommendations from the President's Working Group on Digital Asset Markets and includes bringing offshore crypto business back to America, modernizing custody regulations, and enabling tokenized stocks and funds.

Combined with July's passage of the GENIUS Act for stablecoin regulation, this marks a dramatic regulatory shift in the U.S. It is the first time since Trump was re-elected as U.S. President that the SEC has provided more concrete guidance on its vision for the crypto markets.

Behind the Charts

Chart 1: Bitcoin and Ethereum Prices from July 1 to August 3

July delivered strong gains for crypto, with Bitcoin and Ethereum rising 8.35% and 48.7%, respectively. In fact, it was Ethereum's strongest monthly performance since July 2022.

However, the rally reversed sharply in the second half of the week as several shocks hit simultaneously: a disastrous jobs report, new U.S. tariffs on 60+ countries—including Norway—taking effect following the August 1 deadline, and renewed fears of sanctions on Russia and its trading partners after Trump’s Ukraine ceasefire deadline is approaching without progress.

After a month of strong gains, crypto markets were perhaps overbought—and these catalysts triggered a swift and violent correction.

Chart 2: U.S. Government 2-Year Yield

The U.S. 2-year Treasury yield’s collapse following Friday’s jobs report highlights growing panic in markets. Investors now anticipate aggressive Federal Reserve (Fed, the U.S. central bank) rate cuts—not due to easing inflation, but driven by concerns over slowing growth or even a potential recession.

While lower rates typically support crypto markets, the effect can reverse when rate cuts are driven by economic uncertainty. The reversal came just days after the Fed held rates steady on Wednesday, maintaining a patient stance.

Chart 3: Monthly U.S. Bitcoin and Ethereum ETFs Net Flow

July's spectacular ETF performance saw the U.S. Bitcoin spot ETFs record a net inflow of approximately $6 billion, while Ethereum ETFs posted their strongest month ever with $5.43 billion in net inflows.

Chart 4: Recent Daily U.S. Bitcoin and Ethereum ETFs Net Flow

The strong July performance came to an abrupt halt in August. Both U.S. Bitcoin and Ethereum ETFs recorded their second-largest daily outflow so far in 2025 on Friday, August 1st. Bitcoin ETFs experienced a net outflow of $812.3 million that day, while Ethereum ETFs saw $152.3 million exit.

A Number to Remember

2.96 million Ether

Companies and decentralized projects now hold 2.96 million Ether, worth about $10.87 billion, in strategic reserves—2.45% of total supply. Three firms surpassed the Ethereum Foundation's holdings: Bitmine Immersion Technologies, SharpLink Gaming, and The Ether Machine.

On Our Radar

Key developments to watch this week, all centered on America's economy and markets:

Jobs Report Aftershocks: A single, pressing question remains: Will Friday’s employment disaster continue reverberating through markets, or will panic subside?
China Trade Deal Countdown: The European Union secured its trade agreement with the U.S. just over a week ago, but China faces an August 12 deadline. As that date approaches, markets brace for either a breakthrough or an escalation—both could trigger major moves.
Russia Sanctions Roulette: Trump’s imminent Friday deadline for a Russia–Ukraine ceasefire is fast approaching. He has threatened tariffs and additional sanctions on Russia and 'secondary sanctions' on countries buying Russian energy. With Moscow showing little sign of ending the war, Trump’s response could roil energy markets and risk assets globally.

Mads Eberhardt04/08/2025

Should not be considered financial advice. Crypto may involve high risk.