Armstrong pushes White House crypto deal

1. The relationship between Bitcoin and U.S. Treasury yields has entered a new regime. Based on weekly changes, the 26-week rolling correlation averaged −0.21 in 2022 and −0.31 in 2023, when rising yields tended to coincide with falling Bitcoin prices. The correlation averaged +0.16 in both 2025 and 2026 and stands at +0.18 this week. The key difference is what is driving yields higher: previously, it was expectations of monetary tightening; currently, the pressure increasingly comes from fiscal deficits and concerns over U.S. sovereign creditworthiness. When the market is more concerned about sovereign credit risk than the cost of capital, supply-constrained assets such as Bitcoin and gold can move in the same direction as yields. 2. Macro liquidity remains tight, while the room for policy maneuver continues to narrow. U.S. real GDP grew at an annualized quarter-over-quarter rate of 1.5% in Q2, down from 2.1% in Q1, while the Core PCE Price Index rose 3.34% year over year in July, unchanged from June. This leaves the Fed with limited justification for either rate cuts or further hikes. Meanwhile, the ON RRP balance has fallen to just $456 million, down 35.04% over the past 30 days. With this buffer against the liquidity impact of Treasury issuance now largely depleted, bank reserves have also declined 0.35% over the same period. 3. Prices were largely range-bound this week, but capital rotated meaningfully within crypto. Bitcoin gained 1.14% for the week to $77,860 and Ethereum rose 1.40%, while SOL surged 12.84%. Bitcoin spot ETFs recorded $925 million in net inflows, down 35% from $1.415 billion the previous week. Ethereum inflows climbed 160%, from $314 million to $816 million, while SOL inflows surged 397%. As a result, Bitcoin's share of combined net inflows across the four asset categories fell from 79% to 46%, pointing to a broader diversification of crypto allocations. Assets to watch: BTC, ETH, SOL, HYPE, XAUUSD, UKOUSD, NVDA, AVGO, DELL, PANW.