BTC ETFs Surge and Stablecoins Dominate in Emerging Markets

US headline inflation continues to slow with last week’s August CPI print coming in at 2.5%, down from 2.9% in July.

The ECB cut rates for a second time this year, bringing the base rate to 3.5%. Chinese data continues to disappoint, with inflation coming in weaker than expected at 0.6%, while industrial production and retail sales both slow. China Is Risking a Deflationary Spiral - WSJ

Equity markets bounced into the end of the week, BTC found a firmer footing and the US dollar remains under pressure as we go into the most anticipated event of September.

Pricing for this week’s FOMC meeting has swung to a 60% chance of a 50 bps cut according to the CME FedWatch Tool. To read more about the FED’s dilemma between a 25 and 50bps cut see the latest from the WSJ’s Nick Timiraos: The Fed's Interest-Rate Cut Debate: How Big Should it Be? - WSJ

Another suspected assassination attempt on former President Trump unfolded over the weekend.

The attempted attack occurred at his golf club in West Palm Beach, Florida. Polymarket 2024 Election forecasts are largely unchanged after the news, showing Kamala vs Trump still in a dead heat. Polymarket - 2024 Presidential Election Predictions

BTC ETFs saw more than $400mm of inflows last week, with Friday’s inflows accounting for $263mm.

Fidelity’s FBTC was the main driver of positive momentum, taking in $218mm, followed by ARKB which experienced a net $83mm of inflows throughout the week. ETH ETF inflows continue to be dwarfed by big brother Bitcoin, and outflows from Greyscale’s ETHE are still the largest nominal flows. Bitcoin ETF Flow (US$m) – Farside Investors / Ethereum ETF Flow (US$m) – Farside Investors

Stablecoins: The Emerging Market Story

Castle Island Ventures and Brevan Howard digital published a study, titled “Stablecoins: The Emerging Market Story” which investigates the usage of stablecoins in five emerging markets:

Brazil, India, Indonesia, Nigeria, and Turkey. The primary aim was to understand how individuals in these regions engage with stablecoins in their everyday lives. The study combines survey results from 2,541 crypto users with on-chain data and qualitative insights from companies operating in these markets.

The survey found that “while the most popular goal for stablecoin users in the sample was trading crypto or NFTs, other non-crypto uses were not far behind. Overall, 47 percent of respondents indicated that one of their major goals was saving money in dollars, 43 percent mentioned better currency conversion rates, and 39 percent said earning a yield. The findings are clear: non-crypto uses account for a meaningful share of stablecoin usage modes in the countries surveyed.”

 When focusing specifically on non-crypto related use of stablecoins, “the most popular use was currency conversion, followed by making purchases, and cross border transactions. It’s notable that a majority of respondents in all countries in the sample reported having used stablecoins for a non-crypto trading use case. Across all countries surveyed, stablecoin usage was growing over time. A majority of respondents reported growing their usage in the past year, and an even larger share indicated that they would further increase their usage in the coming year.”

 Find the full report here: Stablecoins: The Emerging Market Story - Castle Island Ventures

Notable Crypto News

US lawmakers divided in first Congressional hearing on DeFi (cointelegraph.com)

UK Introduces Bill to Officially Recognize Cryptocurrency (cryptonews.com)

UK High Court Declares Tether as Property in Ruling After New Regulations (cryptonews.com)

US spot bitcoin ETFs log highest daily inflows in nearly two months as BTC challenges $60,000 | The Block

Former FTX CEO Sam Bankman-Fried files appeal and calls for a new trial | The Block

MicroStrategy buys additional 18,300 bitcoin for $1.1 billion, taking holdings to 244,800 BTC | The Block

The Macro Week Ahead

This week brings much awaited central bank meetings as the US Federal Reserve, the Bank of England and the Bank of Japan meet to decide on monetary policy. We also get Canadian, UK and Japanese inflation readings, and US and UK retail sales.

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