What's Driving The Pullback - Will Markets Go Lower?

Hi [FIRST NAME GOES HERE],

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 $112,186 (~A$174,073) (-4.8%)
• Crypto Market Cap: US $3.57T (-6.7%)
• Gold: US $3,362/oz (-0.2%)
• S&P 500: 6,238 (-2.1%)
• ASX 200: 8,662 (-0.5%)
• 10-Year Treasury Yield: 4.2% (-0.2%)

Executive Summary

Markets reversed sharply this week as revised US employment data showed the weakest three-month job growth since the pandemic. The figures, which cut 258,000 jobs from May and June totals, intensified recession concerns and triggered volatility across risk assets. Bitcoin fell 4.7% on the week, Ethereum dropped 10.6%, and both experienced significant ETF outflows. The escalation of trade tensions and geopolitics, including President Trump's intention to sack the Bureau of Labout Statistics commissioner and new tariffs on key partners, further contributed to the risk-off sentiment.

Despite near-term drawdowns, institutional interest in digital assets remains robust. A new White House policy report has reinforced self-custody, stablecoin expansion, and long-term strategic positioning for Bitcoin. Meanwhile, a proposed SEC rule could pave the way for altcoin ETFs as early as Q4, potentially opening new institutional pathways to tokens like Solana, XRP, and DOGE. We view recent volatility as part of a broader accumulation phase rather than a structural reversal.

Key Stories This Week

US Market Pulls Back on Revised Jobs Numbers, Signals Weakening Economy

The crypto market has been in decline over the last week. Bitcoin (-4.7%) and Ethereum (-10.6%) fell sharply with smaller cap tokens like Solana (-14%) and SUI (-15.5%) down further. Gold (+1.5%) meanwhile, seems to be behaving more akin to a safe haven and is up slightly.

The reason for the decline has largely been economic concerns surrounding the revised US jobs data which was revised down by 258,000 jobs across May and June. The new figures are the weakest three-month average jobs growth since the pandemic, signalling slowing economic growth.

President Trump announced intentions to sack the Bureau of Labour Statistics commissioner on the back of the news that she had also overestimated the numbers in the lead up to Biden's second campaign for President. The fallout triggered the second-largest daily outflow from Bitcoin ETFs (US $812 million) and ended a 20-day streak of net inflows into Ethereum ETFs (US $152 million in outflows).

Bitcoin, Ethereum & Gold Performance (Last 5 Days)

Adding to the turbulent week, on Thursday night, in an executive order, President Trump imposed new tariffs on countries that failed to reach updated trade agreements with the US, including a new 35 per cent tariff on Canada, up from 25 per cent as well as a 50 per cent tariff on Brazil.

From our perspective, if Trump's tactics don't work and the US economy starts to materially decline, either through rising inflation, falling GDP or further slowdowns in jobs growth and employment in the months ahead, we could see a further sell-off in markets.

However, we view these as accumulation opportunities in light of the significant developments that will create further growth into the digital asset sector for years to come, which we cover in the stories below.

White House Crypto Report Endorses Self-Custody and Strategic Asset Reserve

Earlier in the week, a new 160-page 'Project Crypto' report from the President’s Working Group endorsed self-custody, calls for expansion of the stablecoin market, and proposes a new framework for crypto taxation.

Significantly, the report highlighted that 83% of institutions plan to increase crypto allocations in 2025, reinforcing policy support for long-term integration into the US financial system.

On the back of this report, new head of the SEC, Paul Atkins delivered a powerful speech, summarising how he intends to realise Trump's vision of making America the bitcoin and crypto capital of the world by embracing blockchain and ending the regulation by litigation approach of his predecessor, Gary Gensler. It's a fascinating speech that goes into the history of capital markets from its early days on Wall Street where investors used nothing more than verbal agreements and a pen and paper to invest, eventually progressing to ticker tapes, computer entries and towards blockchain based markets today. You can read his speech here.

Developments like these are what gives us the long-term confidence that in spite of near-term volatility, we are in the early innings of digital assets growth as an asset class. We'll be releasing our 2025 BlockByte Investor Report covering some of the key trends as well as our thesis for the market in the months and years ahead.

New Rule Could Make Altcoin ETF Listings Very Likely by Q4

While altcoins have been in the doldrums this week, things could turn around towards the end of this year. Under a proposed rule change between the SEC and CFTC, if a token is trading on a futures exchange for more than 6 months, it may be eligible for an ETF product - making access easier for institutions and retail investors that don't use crypto exchanges. A final decision deadline is set for October, though approvals may come sooner.

If confirmed, the SEC’s rule would create a faster pathway for altcoin ETF approvals, streamlining access for assets like SOL, XRP, and DOGE, while sidelining others such as Cardano and Avalanche which do not yet trade on regulated futures markets. Once approved, altcoin ETFs are likely to attract inflows, but given that ethereum ETFs (~US $20B) are ~7.5x smaller in assets under management than bitcoin ETFs (US $150B), it remains to be seen if the smaller cap ETFs will attract enough inflows to create a substantial impact on price.

Until next week,
James

James Brannan
Managing Director
BlockByte
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(+61) 412 393 634
​james@blockbyte.com.au​
​https://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.

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