Fed Holds Rates Amid Persistent Inflation
The Federal Open Market Committee (FOMC) recently maintained the federal funds rate target range at 4-1/4 to 4-1/2 percent, reflecting a commitment to its dual mandate of maximum employment and 2 percent inflation. This decision aligns with Federal Reserve Chair Jerome Powell's recent hawkish stance, which significantly reduced market expectations for a September interest rate cut. Powell emphasized that future policy adjustments remain strictly data-dependent, noting the inflationary impact of tariffs.
Adding to the cautious outlook, US inflation edged up in June, with the personal consumption expenditures (PCE) index, the Fed's preferred measure, rising to 2.6% year-over-year, up from 2.4% in May. While shelter costs showed a slight year-over-year decline, key inflation metrics, including PCE and Core PCE, persist above the Federal Reserve's 2% target on a three-month annualized basis, underscoring ongoing inflationary pressures.
AI Fuels Tech Giants' Growth
Meta Platforms and Microsoft are significantly escalating their investments in artificial intelligence infrastructure, driven by surging demand for AI-powered services. Both tech giants reported accelerated revenue growth, with Meta's revenue climbing 22% and Microsoft's increasing 18% year-over-year. Microsoft recently achieved a monumental $4 trillion market capitalization, becoming only the second company after Nvidia to reach this valuation, propelled by its robust cloud computing arm, Azure, which saw a remarkable 39% revenue surge. These companies anticipate continued capacity constraints, necessitating substantial capital expenditures, with Meta projecting over $85 billion in spending for 2026 and Microsoft's fiscal Q1 capital expenditures expected to exceed $30 billion.
This aggressive expansion by hyperscalers signals sustained, high demand for advanced AI hardware, particularly benefiting Nvidia, whose high-priced GPUs are central to these infrastructure builds. Earlier concerns about Nvidia's chip sales peaking have been largely alleviated as Meta and Microsoft commit to further increasing their AI spending. Meta CEO Mark Zuckerberg has outlined a vision focused on "superintelligence" and is establishing new labs and gigawatt-scale data centers like Prometheus. Concurrently, Microsoft is deploying extensive new capacity, including over 2 gigawatts in the past year, to fulfill a substantial $368 billion contracted backlog for its cloud services, underscoring the ongoing AI boom and its profound impact across the technology sector.
UK house prices rebounded 0.6% in July to £272,664, recovering from June's significant dip, as reported by Nationwide.
Coinbase Global Inc. clarifies it is not competing with Visa and Mastercard in the crypto payments sector, but rather partnering with them, as reported by Benzinga.
Reddit Inc. stock surged 17.82% after-hours following strong Q2 earnings and an optimistic Q3 outlook, exceeding Wall Street expectations.
Palantir Technologies Inc. has secured a significant Enterprise Agreement with the U.S. Army, establishing a new comprehensive framework for operations.
BlackRock has introduced BILT, its first actively managed infrastructure ETF, aiming to provide investors with diversification and growth potential in the expanding sector.
Design software maker Figma is poised for a robust market debut, with shares indicated to open at over triple their IPO price, potentially valuing the company at nearly $59 billion.
Bitcoin Price at Critical Juncture
Bitcoin's price reached a significant low of $114,400 on Friday, precisely touching the bottom of a well-defined bull flag pattern. This technical alignment, coupled with oversold conditions indicated by short-term metrics like the Stochastic RSI and RSI, suggests the cryptocurrency may be poised for a potential rebound. The constriction of Bollinger Bands further signals an impending substantial price movement.
While the US stock market recently hit an all-time high, partly driven by positive trade agreements including a deal with South Korea, Bitcoin faces immediate headwinds. The past 24 hours saw $600 million in liquidations, and $5.7 billion in options are set to expire, exerting significant selling pressure. Historically, a robust stock market often correlates with positive Bitcoin performance, but current market dynamics present a complex scenario.
On the weekly chart, Bitcoin is testing crucial support levels. The immediate support is identified at $112,000, which was the previous bull flag top, as discussed in Thursday's analysis. However, the $109,000 level is deemed critical; a sustained break below this point could signify the end of the current bull market structure.
Cryptocurrencies Navigate Market Headwinds
Bitcoin and Ether experienced notable price volatility at the start of August, primarily influenced by new tariffs announced by former President Donald Trump. These broad-reaching measures, including a 10% universal tariff on imports and a 15% floor for countries with trade surpluses, are anticipated to intensify inflationary pressures. For more details on these new trade policies, read about Trump's tariff announcement.
Concurrently, the U.S. dollar index (DXY) surged above 100, marking its highest level since late May and gaining over 3% in four weeks. This dollar strength often prompts traders to reduce exposure to riskier assets. Analyst Robin Brooks attributed the dollar's rise to tariff-led inflation, a point she emphasized in her statement on X. Amidst these developments, the Federal Reserve maintained interest rates at 4.25%, dampening market expectations for a September rate cut.
The market's focus has now shifted to the upcoming U.S. nonfarm payrolls report. This critical economic indicator is expected to provide further clarity on the economy's health, potentially influencing the Federal Reserve's future monetary policy decisions and, consequently, the direction of cryptocurrency markets. The convergence of new tariffs, a strong dollar, and central bank caution defines the current volatile crypto landscape.
Mill City Ventures acquired 76.3 million SUI tokens following a $450 million private placement, marking the first publicly listed company with a crypto treasury strategy backed by the Sui Foundation.
Seven asset managers, including Bitwise and Fidelity, have amended their spot Solana ETF filings with the SEC, signaling potential approval.
The SEC Chair declared that most crypto assets are not securities, a significant reversal poised to boost U.S. blockchain innovation.
Coinbase unveiled its ambitious 'everything exchange' plan, aiming to integrate crypto, derivatives, and equities onto a single onchain platform to redefine global finance.
A US federal appeals court overturned the NFT insider trading conviction of former OpenSea product manager Nathaniel Chastain, citing flawed jury instructions regarding the definition of property.
