Crypto Market July Report: The tariff war enters the "desensitization period", and three major driving forces emerge in the post-tariff era.

In July, the global market faced a crucial turning point, as Trump rarely "pressured" the Fed, attempting to push for a rate cut to alleviate government debt pressure. However, Powell maintained independence, keeping the interest rate unchanged, and market expectations for a September rate cut dropped from 60% to 47%. Meanwhile, the tariff war has entered a "post-era"; although the game is not completely over, market reactions have become subdued. The three new main lines in the post-tariff war era are rate cuts, AI, and the institutionalization of encryption assets.

The current U.S. economy resembles a tightrope walker: on one side is the "soft foot brick" of consumer confidence—while the consumer confidence index rose slightly to 97.2 in July from 95.2 in June, it is indeed below market expectations, reflecting an overall cautiousness among consumers, especially regarding confidence in the job market; on the other side, it faces inflationary pressures, with the June CPI rising 2.7% year-on-year and 0.3% month-on-month. Consumers' concerns about tariff policies potentially driving up prices are increasingly intensifying, adding a high degree of uncertainty to the future inflation trend.

Faced with a complex economic situation, the pressure on the Fed is naturally increasing, but at the latest monetary policy meeting on July 31, the Fed still stood pat and kept the interest rate unchanged, marking the fifth consecutive time this year that the benchmark rate has remained in the range of 4.25%-4.5%. This decision has sparked strong dissatisfaction from President Trump, who unusually personally went to the Fed headquarters to exert pressure, demanding a significant rate cut to 1%, and attempted to use issues such as budget overruns on the Fed building renovation as political leverage. At this meeting, for the first time since 1993, two governors appointed by Trump—Vice Chair Michelle Powell, responsible for regulation, and Governor Christopher Waller—cast dissenting votes in favor of an immediate rate cut of 25 basis points, indicating that internal decision-making differences within the Fed have become public.

Faced with pressure, Fed Chairman Powell stands firm, asserting that monetary policy relies solely on data rather than "verbal guidance." He stated that the current inflation level remains above the Fed's target, necessitating a moderately restrictive policy stance.

This tough stance directly affects market expectations.

The market is currently focused on the September interest rate meeting, with the probability of a 25 basis point rate cut rising to between 65% and 90%. Some institutions (such as Goldman Sachs and Citigroup) predict that the Fed will consecutively cut rates in September, October, and December, totaling 2-3 rate cuts.

However, Fed Chairman Powell and most officials are cautious about a rate cut in September, emphasizing the need to observe more economic data, especially employment and inflation dynamics, and have not yet made a clear decision on a rate cut. Powell's remarks once lowered the expectation of a September rate cut to about 40%.

In fact, the Fed has been trying to maintain its policy independence in this dilemma, but the shadow of political interference lingers. Recently, Trump ordered the dismissal of the Labor Department's Bureau of Labor Statistics director, McIntyre, due to dissatisfaction with the latest employment data released by the U.S. Department of Labor. This series of actions has heightened market concerns about the uncertainty of U.S. economic policy.

The tariff policy led by the United States, which was once a "market time bomb," is now taking a back seat. In July, the U.S. signaled a relaxation of tariffs with major economies such as China, Europe, and Japan. Notably, at the end of the month, the U.S. and Europe announced a new trade agreement. Although the U.S. still imposes a 15% tariff on most EU goods, this is lower than the originally threatened rate, reducing short-term uncertainty and pushing the S&P 500 and Nasdaq to new historical highs. Looking ahead, while localized tariff frictions may still occasionally "add more", the market generally believes that the overall tariff level will be kept within a safe zone that does not push the economy into recession, much like installing safety barriers on a roller coaster.

The trend of "worst expectations easing" has become an important psychological basis for the US stock market and encryption to reach new highs again, and it also means that global capital will conduct a new round of assessment of risks and opportunities.

In the new opportunities, the commercialization breakthrough of AI has taken up the banner of the new market narrative. In the latest earnings season, tech giants generally exceeded expectations, especially with Meta (Nasdaq: META) and Microsoft (Nasdaq: MSFT) standing out. Meta benefited from the deep empowerment of AI technology in its advertising business, with its stock price soaring significantly after the earnings report, bringing its market value close to $2 trillion, ready to join the "$2 trillion club" alongside Google (Nasdaq: GOOGL) and Amazon (Nasdaq: AMZN); Microsoft (Nasdaq: MSFT), on the other hand, has entered the "$4 trillion club" as the second company after Apple (Nasdaq: AAPL) due to the strong growth of its Azure cloud services. The once-dominant market issue of tariffs is retreating to the background, indicating that investors' sensitivity to such policy risks is decreasing, while the profit expectations brought by AI innovation are becoming the core driving force of the market, especially in the tech sector.

What is even more noteworthy is that these leading technology companies are ramping up their AI investments with unprecedented intensity. Meta announced an increase in its capital expenditure plan for 2025 to $72 billion, while Microsoft has planned to invest $120 billion in AI infrastructure by 2026. Such a massive scale of investment not only demonstrates the companies' firm confidence in the prospects of AI but also suggests that the commercialization process of AI may be more rapid than the market expects.

The current market is shifting gears: the dominant pattern of trade frictions over the past few years is gradually receding, while new technology tracks represented by AI are beginning to attract more attention, further changing the allocation of funds in the market.

In this round of technology investment frenzy, WealthBee has observed that digital assets are becoming a new option for corporate balance sheets, with more and more listed companies starting to include cryptocurrencies such as Bitcoin in their corporate reserve assets. Moreover, these early adopters often have two characteristics: first, they generally pay attention to the turning point of global monetary policy and potential inflationary pressures, viewing the scarcity and decentralized nature of cryptocurrencies, especially Bitcoin, as effective tools for hedging against inflation and systemic risks; second, the technology industry they belong to has a natural affinity for new asset classes. Against the backdrop of a turning point in global monetary policy, the scarcity characteristics of cryptocurrencies make them a natural potential tool for these companies to hedge against inflation.

Unlike the market conditions in the past few years that relied on retail investor FOMO sentiment to "drive the wave," the approval of Bitcoin spot ETFs at the beginning of 2024, including 11 institutions such as BlackRock and Fidelity obtaining SEC entry permits, has fundamentally reshaped the funding structure and operational logic of the encryption market. By July 2025, this transformation will be even more profound.

In July, the price of Bitcoin started a sharp upward trend from the beginning of the month, breaking through key resistance levels in the first ten days. Compared to the beginning of the year, it has shown an overall upward trend with a cumulative increase of over 20%. The influx of funds has also shown explosive growth, with institutional investors heavily investing through ETFs. As of July 2025, the total scale of Bitcoin ETFs in the United States is about $110 billion, and the market scale continues to grow rapidly. Among them, the iShares Bitcoin Trust ETF under asset management giant BlackRock holds nearly 48% of the market share, with over 540,000 Bitcoins held, valued at around $51.5 billion.

Institutional investors no longer view Bitcoin merely as a high-risk speculative asset, but instead incorporate it into a long-term asset allocation framework, initiating a corporate-level holding competition and driving the market to form a more complex "coin-stock linkage" mechanism: the absolute king of corporate Bitcoin holdings, Strategy (Nasdaq: MSTR), continued to increase its spot Bitcoin position in July, undeterred by high prices, and stated in its latest 8-K filing that the company purchased $2.46 billion worth of Bitcoin within a week at the end of July; the Japanese listed company Metaplanet also followed Strategy’s lead by acquiring Bitcoin as a core strategic asset through a series of acquisitions, with its Bitcoin reserves increasing to 4,206 coins, ranking among the top ten listed companies globally in terms of Bitcoin holdings. The company also plans to accumulate 21,000 Bitcoins by the end of 2026.

It is worth noting that companies are no longer simply "buying and holding" Bitcoin, but are developing reserve structures that combine equity, debt, and derivatives. For example, Metaplanet issues zero-coupon bonds → grants stock appreciation rights (SARs) → redeems the bonds at maturity with the exercise funds, achieving zero-cost financing to hoard coins. The market is also giving a premium to the financial engineering capabilities of such companies.

Looking at the regulatory aspect, the US SEC has released general listing standards for cryptocurrency ETPs, allowing assets with more than 6 months of futures trading history to apply for ETFs. The first batch of Altcoin ETFs is expected to be approved in September-October 2025. The Stablecoin Genius Act is just one step away from the president's signature, and the "US Digital Asset Market Clarification Act" has also started its process in the Senate, eliminating legal ambiguities for institutional participation. Hong Kong's "Stablecoin Ordinance" took effect on August 1, requiring 1:1 reserves, a capital threshold of 25 million HKD, and transparent audits, with Chinese companies (like JD.com) accelerating their layout. It is evident that the focus of this round of regulatory coordination is to clear the rule barriers for traditional capital entry and enhance the efficiency of traditional capital entry.

The cryptocurrency market in Q3 2025 is no longer solely driven by one-way ETF funding; it has firmly reached a new starting point of "institutional dominance + financial engineering + regulatory compliance." The era of price speculation driven by emotions is quietly fading away, and a more mature and resilient market ecosystem is unfolding in the resonance of rules and innovation.

Overall, despite the expected changes in the pace of interest rate cuts and the commercialization of AI, future market fluctuations will still occur in stages, but systemic risks have significantly decreased. A new digital economy cycle is accelerating its formation, and the deep integration of encryption assets with the traditional financial system is irreversible.