In the coming week, several Federal Reserve officials will speak following the recent decision to resume rate cuts. Their remarks will be closely watched for how individual FOMC members assess the balance of risks, especially after signaling a central projection of two additional 25 bp cuts this year and another in 2026.
Key data releases
Durable goods data came in much stronger than expected, reigniting the inflation debate and briefly weighing on digital asset prices as rate expectations turned mildly more hawkish. The main highlight this week is this Friday’s release of the core PCE deflator—the Fed’s preferred inflation gauge. While core CPI printed a relatively hot 0.3% MoM, the PCE measure was softer at 0.2% MoM and 2.9% YoY, helped by differences in housing weights and inputs such as airfares and healthcare. Following the publication, the Fed is expected to make additional cuts in October and December.
We expect the Fed to ultimately deliver more cuts than its current guidance suggests:
- 25 bp in October
- 25 bp in December
- Additional reductions could happen in January and March, followed by a pause for reassessment
Inflation remains above target and tariffs may keep it sticky in the near term. Still, the backdrop is shifting, the labor market is softening, and the drivers that pushed inflation to 9% in 2022 (energy, rents, wages) are fading. As these disinflationary forces become more evident later this year, they are likely to provide support for bitcoin prices in particular.
We expect a gradually cooling economy and rising unemployment to pull inflation closer to 2% by end-2026. Lower borrowing costs, a weaker dollar, and reduced trade uncertainty could help stabilize business sentiment and set the stage for stronger growth into 2026.
Digital asset flows
Markets have reacted cautiously to the Fed’s “hawkish cut” rhetoric. This week saw US$235m in outflows. Importantly, the longer-term case remains intact: a dovish Fed stance and an improving disinflationary outlook. Looking ahead, anticipation around potential SOL and XRP ETF launches in the US is likely to drive renewed momentum. Despite recent outflows from Bitcoin and Ethereum, both SOL and XRP continue to attract persistent daily inflows.
Why it matters
With the Fed leaning toward continued rate cuts, lower yields on traditional fixed income could push investors to explore alternative sources of return. Digital assets, especially those with growing institutional access through ETFs, become part of that conversation.
For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.
Originally published on ETF Trends
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