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There are increasing signs that tariff-driven inflation is now weighing on Federal Reserve policy deliberations, with the upcoming FOMC meeting at the end of July potentially marking a historic turning point. For the first time in over 30 years, we may witness a double dissent among Fed Board members, a signal of intensifying internal division. This development underscores the complex balancing act that Chair Jerome Powell now faces—not only in navigating a fragmented committee, but also in contending with mounting political pressure from President Trump, who is actively pushing for interest rate cuts.
Bitcoin, ever-sensitive to shifts in Fed policy expectations, is likely to respond strongly to any such dissent, especially if accompanied by overt political interference. The combination of internal discord and external pressure could heighten market uncertainty, potentially driving price volatility in the coming weeks.
On the economic front, this week offered limited data, but what did emerge points to mounting risks in the housing sector. Existing home sales fell sharply by 2.7% month-on-month, well below expectations, as rising supply and weak demand begin to weigh on prices. Meanwhile, the S&P Case-Shiller Home Price Index posted a second consecutive monthly decline. Given that housing constitutes the largest store of household wealth for most Americans, any sustained downturn could significantly dent consumer confidence.
While President Trump is expected to keep up pressure on the Fed to cut rates, the actual transmission of those cuts to the mortgage market is far from certain. With mortgage rates largely influenced by long-end yields, concerns around inflation persistence and fiscal sustainability mean short-end rate cuts may offer little immediate relief to potential homebuyers.
Ethereum resilience, Bitcoin pause, altcoin rotation
On the digital asset front, Ethereum ETFs are showing remarkable strength. Today marks the one-year anniversary of Ether ETF launches in the US. Despite initial hesitation and modest inflows, this month has seen a dramatic turnaround. So far this week, Ethereum has attracted $1.1 billion in inflows, with sentiment remaining bullish despite Bitcoin price softness. Proportionally, Ethereum ETFs have seen inflows equivalent to 16% of AUM, compared to just 3% for Bitcoin, highlighting a resurgence in investor interest. According to Bloomberg, the ETHA ETF is now the third fastest ETF in history to reach $10 billion in assets under management.
Bitcoin, by contrast, appears relatively quiet. After surging past all-time highs driven by dovish Fed commentary and basis trading activity, recent price declines look more like a healthy correction than a cause for concern. Outflows this week total $175 million, modest in comparison to the $5.4 billion in month-to-date inflows. As Bitcoin’s options market matures and open interest grows, its volatility continues to decline—a factor that may be prompting traders to rotate into altcoins in search of higher returns.
Indeed, altcoin season appears to be emerging. Bitcoin dominance has fallen by 6% since its June peak, while Solana and XRP have climbed to the top of inflow lists. Much of this enthusiasm appears tied to speculation surrounding forthcoming US spot ETF launches for these assets. Additionally, interest in smaller altcoins is gradually increasing, suggesting that investors are becoming more selective and discerning in their allocations.
