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The US July payrolls report shows mixed results. While the unemployment rate has dropped, indicating a tight labour market, consumer demand is weak. This might worsen with recent gasoline price spikes, negatively affecting consumer sentiment and leading to a potential change in economic expectations.
With uncertainty in payroll growth and a stable but slowing trend, the wage growth data alone doesn’t seem like enough to warrant a further rate hike in September. This could be favourable for Bitcoin as the FED continues to pivot.
In the digital asset sector, investment products experienced US$107m in outflows last week. A quieter fourth week of outflows is anticipated, with minor inflows into short-Bitcoin for the first time in 14 weeks. Bitcoin outflows totalledUS$111m, the largest since March. However, altcoins like Solana are seeing significant inflows. Volumes in the broader crypto market remain 62% below the year-to-date average on crypto exchanges as the summer doldrums are in full force.
The blockchain equity earnings season is underway. Semiconductors reported marginal beats in revenue and EPS, with companies like TSMC and Samsung experiencing weak legacy demand and suggesting that AI demand may be temporary. Firms like AMD and Intel have given wide guidance, leading to difficulty in assessing Q3/Q4 demand, and the focus is now on Nvidia's report on August 23rd as a potential indicator for AI demand.
Bitfarms reported strong revenue but missed on EPS, but reduced debt significantly, leaving them well-capitalized. July production numbers were lower, mainly due to hot weather conditions affecting power.
Coinbase beat lowered expectations, but with a decline in transactions-based revenue by 13% since Q1. This has led to services and subscriptions accounting for over 50% of total revenues, and a fall in interest income to 30% of total revenue. In the payments sector, both PayPal and Square beat expectations but showed operating margin decline, mainly from competition with Apple Pay. PayPal's launch of PYUSD, despite criticism, adds to the competition in the stablecoin space, potentially impacting Coinbase's future interest income.
In summary, the landscape is marked by mixed economic signals, continued evolution in digital assets, and competitive dynamics in both the blockchain and payments sectors.
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