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EU Energy Future Uncertain, Stablecoins Reshape Finance

Europe's reliance on US LNG is at risk from a potential peace deal with Russia, as stablecoins are projected to reach trillions in value, with China exploring a yuan-backed version.

Thursday, August 21, 2025
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STORY OF THE DAY
STORY OF THE DAY

Europe's Shifting Energy Alliance

Europe's energy landscape has significantly shifted, with the U.S. emerging as a crucial liquefied natural gas (LNG) supplier. This strategic alliance gained momentum as Eastern European nations sought to reduce their historical reliance on Russian gas. The U.S. has since become a dominant exporter, with Europe accounting for a substantial portion of its LNG shipments, notably 53 percent of all U.S. LNG exports.

However, this established energy partnership faces potential disruption. Concerns are escalating that a prospective peace deal with Russia, possibly brokered by Donald Trump, could undermine the alliance by facilitating the reintroduction of Russian gas into the European market. Additionally, Trump's administration has advocated for increased European purchases of U.S. energy while challenging existing EU climate regulations, further complicating the transatlantic energy relationship.

Fed Holds Rates Amid Inflation Fears

The Federal Reserve's July meeting minutes reveal that policymakers largely prioritized concerns over rising inflation, particularly from tariffs, above potential job market downturns. Despite inflation remaining above the 2% target and anticipated to increase in the near term due to tariff effects on goods prices, the Federal Open Market Committee (FOMC) opted to keep interest rates unchanged at 4.25%-4.5%. This decision reflects a consensus that upside risks to inflation currently outweigh downside risks to employment.

Elevated economic uncertainty marked the discussions, with the full impact of tariffs on the economy and inflation still unclear. While the minutes of the July 29–30, 2025 meeting noted vulnerabilities in the financial system and potential employment risks from factors like AI and a deteriorating housing market, two governors dissented, advocating for a rate cut based on labor market concerns. Future monetary policy adjustments will depend on incoming inflation and employment data.

IN OTHER NEWS
IN OTHER NEWS
  • The US and EU struck a landmark trade deal, capping tariffs on European cars, pharmaceuticals, and semiconductors at 15% while fostering significant energy and tech investments.

  • The government extended its employment scheme in England by an additional year with £45 million in funding to help individuals find work.

  • Denmark plans to abolish its 25% VAT on books, the world's highest, to combat a 'reading crisis' and encourage more people to read.

  • China's rare drug market is expanding significantly, driven by new policies aimed at increasing access to costly therapies and strategic partnerships.

  • China is pressuring tech giants like Alibaba and ByteDance to reduce Nvidia chip orders following controversial remarks by Howard Lutnick.

  • Nordson Corp. stock surged over 5% after hours following a strong Q3 earnings and revenue beat, driven by double-digit growth in key segments.

CRYPTO
CRYPTO

Stablecoins Reshaping Global Finance

The stablecoin sector is projected to reach trillions in valuation, according to Goldman Sachs, signaling a significant shift in global finance. This growth is driven by increasing integration into traditional financial systems and advancing regulatory frameworks, such as the proposed GENIUS Act. The rise of stablecoins, particularly those like USDC, is also anticipated to boost demand for US Treasuries, potentially influencing bond yields as capital inflows increase.

Concurrently, China is actively exploring the issuance of yuan-backed stablecoins as a strategic move to counter the longstanding dominance of the US dollar. This initiative aims to reshape cross-border financial transactions but faces considerable challenges due to China's existing capital controls. The State Council of China is reportedly reviewing the roadmap for these digital assets, underscoring the high-level governmental interest in this financial strategy.

The convergence of market predictions and national digital currency strategies highlights a transformative period for global financial architecture. While entities like Goldman Sachs forecast a massive expansion of the stablecoin market, nations like China are leveraging these digital assets to assert greater financial sovereignty. This dual evolution underscores the increasing influence of digital currencies on international economic dynamics and the future of global payments.

Ethereum Gains Significant Institutional Investment, Outpacing Bitcoin

Ethereum has emerged as the leading digital asset for institutional investment, attracting a substantial $2.87 billion in weekly inflows, representing 77% of the total. This surge brings Ethereum's year-to-date net inflows to approximately $11 billion, elevating its share of total assets under management to nearly 30%. This figure notably surpasses Bitcoin's 11.6% share, despite Bitcoin receiving $552 million in weekly inflows. Other altcoins like Solana and XRP also saw considerable investments, with $176.5 million and $126 million respectively, signaling a broader shift in institutional preferences.

Despite this strong institutional interest, Ethereum's price is navigating a challenging recovery. Having initiated a rebound from the $4,050 zone and trading above $4,220, it faces significant resistance near the $4,400 mark. A bearish trend line at $4,355 and key resistance levels at $4,380 and $4,460 are proving to be hurdles, with the cryptocurrency currently positioned below its 100-hourly Simple Moving Average.

Similarly, Bitcoin's price is attempting a recovery above $114,000 but encounters strong resistance between $114,800 and $115,000. Like Ethereum, Bitcoin is also trading below its 100-hourly Simple Moving Average. This price action for both major cryptocurrencies occurs amidst the backdrop of shifting institutional capital, highlighting a dynamic market where investment flows are diversifying beyond traditional dominant assets.

TRENDING IN CRYPTO
TRENDING IN CRYPTO
  • MEXC has launched its Foundation with a $30 million initiative, aiming to accelerate Web3 growth and adoption through education, empowerment, and community giving.

  • MAG Group has replaced its $500 million real estate tokenization pilot with Mantra, pivoting to a $10 billion mandate with Mavryk Network to meet institutional needs and scale.

  • Federal Reserve Vice Chair Michael Barr has signaled the central bank's openness to blockchain and AI, recognizing their potential impact on the financial system.

  • YZY Money, a memecoin linked to Kanye West, launched on Solana with extreme volatility and insider trading allegations, leading to significant price drops after initial surges.

  • The Winklevoss twins have injected $21 million in bitcoin into the Digital Freedom Fund, a PAC dedicated to shaping pro-crypto policies in the U.S.