Major Decline in the Crypto Market
According to Darkex data, Bitcoin fell 2.63% to below $110,000, while Ethereum dropped 3.72% to $3,800. The sharpest decline was seen in DeFi, with Aster falling 21.05%. On the Layer2 side, Linea fell 6.99% and PayFi’s XRP fell 4.83%. CeFi lost 4.37%, while OKB stood out with a 5.72% increase. In Layer1, Avalanche lost 11.61% of its value.
US Data: Strong Economy Weakens Interest Rate Cut Expectations
Data released by the US highlighted resilient economic growth and strong consumption. Second-quarter GDP came in at 3.8%, exceeding expectations. Personal consumption expenditures were also revised to 2.5%, contributing to growth. Jobless claims came in below expectations at 218,000, while continuing claims fell short of expectations at 1.926 million. Durable goods orders also exceeded market forecasts, rising 2.9%. These figures show that the combination of strong consumption and a robust labor market is dampening expectations for interest rate cuts in the short term.
New Tariff Wave from Trump
Trump announced new industry tariffs via Truth Social. Effective October 1:
- 100% customs duty on pharmaceutical products (except those with manufacturing facilities in the US)
- 50% tax on kitchen/bathroom cabinets, 30% tax on upholstered furniture
- 25% tariff on heavy trucks.
The aim is to attract investment in the pharmaceutical and manufacturing sectors to the US.
Risk of Government Shutdown
The White House pressured Democrats, saying that permanent layoffs could occur if the government shuts down. In a memo sent by the OMB to agencies, it requested that layoff plans beyond the usual temporary furloughs be prepared. If no agreement is reached, the federal government will shut down on October 1. Republicans argue that the only option is a 7-week temporary funding bill.
Diverging Views Among Fed Officials
- Milan (dove): Advocates for rapid 50 bp cuts, expects 3% growth in the second half of the year.
- Daly (neutral): More cuts may be needed, closely monitoring low employment rates and job search times in the labor market.
- Bowman (dovish): Focus should shift from inflation to employment due to the fragility of the labor market.
- Schmid (hawkish): Says controlling inflation is the priority and cuts may not be needed anytime soon.
Joint Statement on Fed Independence
Eighteen former Fed chairs and Treasury officials, including Yellen, Bernanke, and Greenspan, petitioned the Supreme Court to prevent Trump from removing Fed Chair Cook during the legal process. They warned that undermining the Fed’s independence would shake confidence.
TikTok Deal Approved
Trump signed an executive order titled “Preserving National Security While Saving TikTok,” allowing TikTok to continue operating in the US. Under the new structure, a joint venture to be established in the US will control TikTok’s algorithm, code, and content moderation. ByteDance’s stake has been reduced to below 20%. The joint venture will be committed to protecting US user data and national security.
SEC Chairman Issues Conflict of Interest Warning
SEC Chairman Paul Atkins said in a speech at Georgetown University that investigations would be conducted into conflicts of interest in the crypto industry. While Atkins did not comment specifically on the Trump family’s World Liberty Financial (WLF) project, he stated that the SEC would act in accordance with current laws. He also emphasized the goal of improving digital asset regulations with “Project Crypto” and “Innovation Exemption.”
US-Russia Air Tension
NORAD detected and intercepted two Tu-95 bomber aircraft and two Su-35 fighter jets near Alaska. These aircraft entered the Alaska Air Defense Identification Zone, which is international airspace but adjacent to US-Canadian sovereign territory.
China-US Economic Dialogue
Chinese Premier Li Qiang met with top US CEOs. At the meeting, attended by giants such as BlackRock, Citadel, Pfizer, Visa, FedEx, and Estée Lauder, Li emphasized the importance of friendship and partnership in China-US relations. He also promised stability and investment security to foreign companies. The crypto sector fell across the board today, with BTC falling below $110,000
New ETF Developments
- Bitwise submitted its Hyperliquid ETF application to the SEC
- Hashdex Nasdaq Crypto Index US ETF listed on Nasdaq. This product provides exposure to XRP, SOL, and XLM in addition to BTC and ETH
Investigation into Crypto Companies in the US
The SEC and FINRA have scrutinized the business models of over 200 companies that declared crypto as their core strategy this year. Unusual movements in stock prices prior to announcements by some companies are the main reason for the investigation.
Ethereum Updates
The Ethereum client Nimbus released version v25.9.1. This update is minor for the mainnet but critical for the Hoodi, Sepolia, and Holesky testnets. The update is necessary to prepare for the upcoming Fusaka fork.
ETF Flows: Outflows in Bitcoin and Ethereum
Bitcoin ETFs saw $258M in outflows on September 25. Although there was a $79.7M inflow into IBIT, a $115M outflow from Fidelity FBTC dominated. Total value is $144.35B, market share is 6.64%.
Ethereum ETFs saw outflows for the fourth consecutive day, with a loss of $251 million on September 25. The largest outflow was $158 million from Fidelity FETH. Total value is $25.59 billion, with a market share of 5.46%.
Trump Administration Moves to Restrict Chip Imports
The Trump administration plans to reduce semiconductor imports. Companies that cannot balance the ratio of imported chips to domestic chip production will be subject to tariffs. This is part of the US’s push to increase domestic production in strategic technology areas.
Plasma Integration from Ethena
Ethena Labs launched its $USDe and sUSDe stablecoins on the new Layer1 network Plasma. The launch featured over $2B in liquidity and more than 100 integrations. Aave, Curve, and Balancer integrations went live on day one; Pendle will be added. On Plasma, Aave opened dedicated pools for $500M USDe and $450M sUSDe.
WLFI Buyback and Burn Program
World Liberty Financial (WLFI) announced its decision to allocate 100% of treasury liquidity fees to buybacks and burns. The program begins this week, and completed transactions will be shared transparently with the community.
