BlockByte Weekly: New Highs & A Sharp Pullback - What Happened This Week

Thanks for reading The BlockByte Weekly, where we summarise the key updates in crypto over the last week and provide our perspective on what you need to know as an investor.

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Weekly Snapshot

• BTC: US $117,436 (+0.8%)
• Crypto Market Cap: US $3.92T (+1.1%)
• Gold: $3,324/oz (-1.9%)
• S&P 500: 6,449 (+1.5%)
• ASX 200: 8,938 (+1.2%)
• 10-Year Treasury Yield: 4.32% (+0.02%)

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Key Stories This Week

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The Rally Up & The Pullback

Earlier this week, Bitcoin made new all-time highs of US $124,279 bringing year to date gains to over 33%. The broader crypto market also rallied significantly, before a sharp pull back sent prices tumbling between 5%-10% across assets.

There were several drivers of the rally and subsequent pullback this week which we delve into below:

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The Rally Up

• On Wednesday, US CPI, a measure of inflation, came in at 2.7% annualised vs. 3% expected. Core CPI was modestly higher than expected but overall the market digested the news as positive reinforcement that the tariffs haven't caused the significant inflation many economists were expecting, yet.
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• On the back of the CPI figures, markets priced in a 94% chance of a rate cut at the Fed's next meeting in September. Treasury Secretary Scott Bessent suggested the Federal Reserve should consider a 50 basis point rate cut, a potential catalyst that would increase liquidity across the market.
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• On the positive momentum, trading activity surged in the market, with Ethereum ETFs recording billion dollar inflow days and speculators using large amounts of leverage (mainly long positions) on expectations of the positive news driving further price gains.

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The Pullback

• On Friday, crypto markets fell sharply as the US Producer Price Index which measures the wholesale cost of goods and services to businesses (excluding imports) jumped 0.9% in July, triple market expectations.
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• Core PPI, which excludes food and energy, rose by the same amount. The surprise inflation spike dampened rate cut hopes. Bets on a rate cut fell to 74%. While Bitcoin shed roughly 5.5%, altcoins such as Solana fell by more than 12.5%, demonstrating a higher sensitivity to the market news.
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• The pullback in price on Friday saw US ~$1 billion in collateral wiped out from leveraged investor positions in just 24 hours which further extended the downside to markets as forced selling took place.

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What We Think

There's a little bit of 'wait and see' uncertainty in markets at the moment. We expect to see ongoing inflation in the coming months due to the impact of tariffs which will cause the occasional pullbacks and shakes to investor confidence. We don't think we've seen the full impact of tariffs just yet as US importers stocked up on goods before tariffs came into effect. We expect more inflation shocks in the months ahead.

However, we're viewing pullbacks as 'buy the dip' opportunities. In spite of the market volatility, JPMorgan forecasts high single-digit S&P 500 returns over the next 12 months, citing resilient corporate earnings, tariff resilience among large firms, and favourable tax policy. Over 80% of S&P companies beat Q2 estimates, with index earnings growth now tracking 11% versus sub-5% forecasts.

Whether rate cuts happen in September or in the following month is short-term noise. We believe the main drivers of the digital asset market are the significant shifts in regulation in the US and subsequent waves of institutional adoption and treasury buying that have characterised 2025 so far. We delve more into these key changes in our 2025 key trends report which you can download here.

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Harvard Adds US $117M in Bitcoin, Norway's Sovereign Wealth Increases BTC Exposure to US ~$1.35B

Building on the above, this week saw Harvard University’s investment arm disclose US $117 million in BlackRock’s Bitcoin ETF, making it their fifth-largest holding, just ahead of Google and NVIDIA, with Microsoft their largest position at US $310 million. BlackRock’s ETF now has US $84 billion in assets under management and has drawn allocations from major institutions, including a $500 million stake by an Abu Dhabi sovereign wealth fund earlier this year.

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Adding to this, in Q2, Norges, Norway's sovereign wealth fund, raised its bitcoin-equivalent exposure from 6,200 to 11,400 BTC an 83% increase, now approaching US $1.35 billion. These are just two examples from the last week alone. As you may have also seen in our daily or other weekly newsletters, there are now 168 publicly listed entities that have added Bitcoin to their balance sheet, with a wave of Ethereum treasury companies now following suit and raising as much as US $20B each to buy ETH.

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In Conclusion

Inflation shocks are to be expected in a world of tariffs and de-globalisation. The real risk factor is if we see material declines in levels of earnings growth or spikes in unemployment levels, which for now remain near historic lows of 4.2%. Until then, we're expecting continued inflation and nominal growth in digital asset prices, supported by regulatory tailwinds and institutional adoption. Our perspective hasn't shifted with this week's rally and pullback, but as always, we'll be keeping a close eye on the market to share any key changes in our positioning and perspective.

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Until next week,

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James Brannan
Managing Director
BlockByte
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​james@blockbyte.com.au​​

BlockByte does not provide financial advice. We provide a personalised brokerage service with tailored support, research and secure custody for investing in digital assets. Reach out to our team to discuss how we can help.