Spotlight

Last week, the digital asset market experienced significant volatility. Initially, Bitcoin and Ether rallied on optimism from a softer consumer inflation report. The Consumer Price Index (CPI) for July came in at 2.7% on an annual basis, which was slightly below the market's expectation of 2.8%. However, this positive momentum was quickly halted after the release of the U.S. Producer Price Index (PPI) data. The PPI rose 0.9% month-over-month in July, far exceeding the initial market expectation of just 0.2%.

This unexpected PPI result reignited inflation concerns and caused investors to scale back their bets on a more aggressive interest rate cut from the Federal Reserve in September. While the market saw a pullback, Ethereum demonstrated resilience with strong institutional capital inflows into Ether ETFs. This growing adoption is seen as a positive sign for the asset's future, indicating that corporate treasuries are increasingly diversifying beyond Bitcoin-only strategies.

Simultaneously, geopolitical events also drew market attention. In Alaska on Friday, U.S. President Donald Trump and Russian President Vladimir Putin met. While Putin mentioned an "agreement" in a post-meeting news conference and Trump said "great progress" was made, neither leader made any mention of a ceasefire to end the war in Ukraine. This lack of a clear breakthrough left global markets attentive, but without any major abrupt movements following the meeting. Markets continue to monitor ongoing peace negotiations, which could have significant impacts on commodity prices, and by extension, global economic stability.

Ethereum 

Amidst the broader market uncertainty, Ethereum demonstrated strong optimism and resilience. The asset's price surged, bringing it close to its historical all-time high of $4,878, largely due to a massive influx of institutional capital. Its newly launched spot ETFs saw a record-breaking single-day net inflow of over $1 billion on Monday, August 11th. This surge indicates that companies are increasingly viewing Ethereum as a strategic reserve asset, a role historically dominated by Bitcoin. This growing institutional confidence is further fueled by regulatory clarity provided by developments like the GENIUS Act, which establishes a clearer framework for stablecoins. This is particularly significant because over 51% of all stablecoins are hosted on the Ethereum network, solidifying its role as a core piece of the digital financial infrastructure and making it a more attractive option for corporate treasuries.

Bitcoin

Bitcoin's price soared to a new all-time high above $124,000, fueled by optimism for a Fed rate cut and strong institutional inflows. However, the rally abruptly ended after a much hotter-than-expected Producer Price Index (PPI) report ignited inflation fears. This data triggered a sharp pullback, as it tempered rate cut expectations and led to significant profit-taking.

Looking ahead

Heading into the next week, the digital assets market remains on high alert, with several key economic and political factors poised to dictate its direction. Investors will be keenly watching for any commentary from Federal Reserve officials, as their statements could signal a change in the expected pace of interest rate cuts. Simultaneously, the broader, delayed impacts of new Trump tariffs on global trade may increase market uncertainty and affect risk appetite. Within the digital assets market itself, the performance of spot ETFs for both Bitcoin and Ethereum will be a crucial indicator of institutional sentiment.

Teroxx Decoded

Bitcoin miners primarily earn revenue from two sources: Block Rewards and Transaction Fees. Block Rewards are a fixed amount of newly issued Bitcoin for mining a new block, which was halved from 6.25 BTC to 3.125 BTC in April 2024. Transaction fees are variable payments from users to get their transactions included in a block faster. The chart illustrates the historical dominance of Block Rewards (blue area) as the main source of income for miners.

While Block Rewards have consistently been the primary revenue stream, the gray area in the chart, representing Transaction Fees, shows occasional significant spikes. These spikes often correspond to periods of high network activity and demand for block space. The largest spikes in Transaction Fees are visible around mid-2023 and early 2024, which aligns with peaks in network usage, possibly driven by events like ordinals or inscriptions. After the halving in April 2024, the proportion of revenue from Transaction Fees appears to have become more significant, as the fixed Block Reward was reduced. This highlights how the balance between these two revenue sources shifts based on network events and changes to the Bitcoin protocol.