September 25th, 2025

Circular capital: Inside the closed-loop ecosystem propelling (and distorting) the AI boom

The artificial intelligence sector is experiencing an unprecedented surge, driven by what many observers describe as an arms race among tech giants and startups alike. Major players like Microsoft, Amazon, Nvidia, and Oracle are pouring billions into promising AI ventures such as OpenAI, Anthropic, and Scale AI, creating intricate funding ecosystems that blur the lines between investment and self-serving commerce.

These startups, in turn, funnel much of that capital back into the investors’ own products, including cloud computing services, specialised chips, and data infrastructure. This circular flow of money strengthens the positions of a handful of dominant companies while raising serious questions about competition and the efficient use of resources in a field still in its early stages.

Circular capital loops

This setup resembles a high-stakes poker game where the house always wins, potentially stifling innovation from smaller players and inflating valuations beyond sustainable levels. The industry appears to operate on the belief that AI could evolve into a winner-take-all market, justifying these closed loops as a necessary hedge against being outpaced.

Recent reports indicate OpenAI’s valuation has climbed to around 324 billion dollars, with Anthropic not far behind at 178 billion dollars, figures that underscore the rapid escalation in private market enthusiasm. Scale AI, meanwhile, maintains a valuation near 29 billion dollars, often tied more to projected spending on infrastructure than to immediate revenue streams.

Regulatory scrutiny mounts

Regulatory scrutiny is intensifying as these dynamics unfold, with authorities expressing growing alarm over market concentration and potential antitrust issues. Nvidia, commanding over 80 per cent of the AI chip market, faces investigations from the US Department of Justice regarding its acquisition of Run:ai, a move that could further entrench its dominance.

The Financial Stability Board has issued warnings about the systemic risks posed by AI’s heavy reliance on a limited number of infrastructure providers, highlighting vulnerabilities in areas like cybersecurity and model governance that could cascade through the financial system. In my view, these concerns are well-founded, as the concentration of power in a few hands echoes past tech bubbles where over-dependence on key suppliers led to widespread disruptions.

Capital allocation risks

The circular capital loops exacerbate this, as seen in deals where OpenAI commits to massive spending on Oracle’s cloud services following investments from similar tech behemoths. While analysts remain optimistic about AI’s transformative potential in the long term, they caution against short-term returns hampered by regulatory hurdles and inefficient capital allocation.

The risk of overvaluation looms large, with private AI firms’ worth often predicated on future infrastructure expenditures rather than proven profitability, a pattern that could precipitate corrections if growth expectations falter.

Macro market backdrop

Shifting to broader economic indicators, global risk sentiment stays subdued as markets await new developments amid worries ranging from labor market slowdowns to persistent inflation. Investors are closely monitoring upcoming US initial jobless claims data, with estimates around 233,000 following last week’s 231,000, a figure that could sway perceptions of the Federal Reserve’s policy direction.

The Swiss National Bank recently held its policy rate at 0.00 per cent, aligning with expectations and reflecting a cautious approach to monetary easing in the face of stable inflation. Wall Street closed lower on Wednesday, with the Dow Jones Industrial Average down 0.37 per cent at 46,121, the S&P 500 off 0.28 per cent at 6,638, and the Nasdaq declining 0.34 per cent to 22,498, driven by retreats in technology stocks amid valuation concerns.

Wall Street and commodities

Treasury yields edged higher, with the 10-year note at 4.147 per cent and the 2-year at 3.604 per cent, signalling mixed expectations for interest rate paths. The US dollar index strengthened by 0.6 per cent to 97.873, while gold prices dipped 0.7 per cent to 3,736 dollars per ounce, pulling back from recent highs as the dollar gained ground. Brent crude rose 2.5 per cent to settle at 69.31 dollars per barrel, buoyed by supply concerns from ongoing geopolitical tensions in Ukraine impacting Russian oil facilities.

Asian equities showed mixed performance, with Chinese markets buoyed by AI and tech optimism, though early trading today indicated continued variability. US equity futures point to a higher open, suggesting some rebound potential. In my opinion, this muted sentiment reflects a market grappling with uncertainty, where AI hype provides sporadic lifts but broader economic signals like job data and yields temper enthusiasm, potentially setting the stage for volatility if inflation proves stickier than anticipated.

Crypto under pressure

Turning to cryptocurrencies, contrary to chatter among some circles that altcoins are outperforming Bitcoin, the data paints a different picture of weakening momentum for alternatives. The CoinMarketCap Altcoin Season Index stands at 68 out of 100, still in altcoin territory but down 4.23 per cent over the past 24 hours from last week’s 77, indicating a cooling trend.

Bitcoin’s dominance has risen to 57.97 per cent, up 0.25 points in the last day, as capital shifts toward the flagship cryptocurrency amid altcoin retreats. Ethereum, a bellwether for the sector, has fallen 11.6 per cent weekly, with Chainlink down 11.2 per cent and Cardano dropping 12.0 per cent, underscoring broader underperformance.

Derivatives markets reinforce this caution, with altcoin funding rates turning negative at -0.00035835 per cent and open interest declining 4.1 per cent in 24 hours, compared to Bitcoin’s more resilient metrics.

Investor takeaway

From my standpoint, this shift signals a risk-off environment in crypto, where Bitcoin’s perceived safety draws inflows during uncertainty, much like gold in traditional markets. Historically, Altcoin Season Index readings dipping below 70 often herald Bitcoin dominance rebounds, and current social discussions around Ethereum’s high fees and upcoming upgrades like Pectra in Q4 2025 add to the drag.

Traders unwinding leveraged positions faster in altcoins than in Bitcoin further erodes confidence in near-term rallies for alternatives, suggesting investors should prioritise Bitcoin amid this rotation.

Overall, the interplay between AI’s frenetic funding cycles, emerging regulatory pressures, subdued macro conditions, and crypto’s Bitcoin-centric tilt illustrates a financial landscape fraught with opportunity and peril.

I believe the AI arms race, while fuelling innovation, risks over-investment that could echo the dot-com era’s excesses if not tempered by competition and oversight. Investors would do well to diversify beyond concentrated bets, monitoring systemic risks and market signals closely to navigate what may prove a pivotal juncture for technology-driven growth.

Source: https://e27.co/circular-capital-inside-the-closed-loop-ecosystem-propelling-and-distorting-the-ai-boom-20250925/

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

j j j

September 25th, 2025

Asia-Pacific leads boom in crypto transactions amid regulatory hurdles: report

The Asia-Pacific region has become the world’s fastest-growing hub for cryptocurrency transactions, with on-chain activity surging despite inconsistent oversight and varied pathways to adoption, according to a new report.

Analysts say the trend reflects not only diverse use cases – from remittances and savings to gaming and speculative trading – but also regulatory uncertainty across the region, which could limit long-term potential even as momentum builds.

The report, released on Wednesday by blockchain analytics firm Chainalysis, found that during the 12 months ending June 2025, Asia-Pacific had emerged as the fastest-growing region for on-chain crypto activity, with a 69 per cent year-over-year increase in value received.

Total crypto transaction volume in the region grew from US$1.4 trillion to US$2.36 trillion, driven by robust engagement across major markets including India, Vietnam and Pakistan.

Monthly on-chain value received grew from about US$81 billion in July 2022 to peak at US$244 billion in December 2024, a threefold increase over 30 months. Transaction volumes have since remained robust at above US$185 billion per month through mid-2025.

In contrast to North America, where cryptocurrency activity is largely driven by institutional investment, Asia-Pacific’s growth is fuelled by broader, more retail-oriented demand, according to Chengyi Ong, head of Asia-Pacific policy at Chainalysis.

The report cites Japan, Indonesia, South Korea, India and Vietnam as among the nations spearheading transaction growth in the Asia-Pacific, fuelled by a combination of supportive policies to use cases.

“Mature markets like Singapore and Hong Kong remained relatively stable in terms of on-chain value transferred,” Ong said.

In the top market India, the digital currency is meeting a large diaspora’s remittance needs while young adults have embraced crypto trading as supplementary income, the report says.

“India has a large and technologically savvy population where young students experiment with blockchain and coding, and it also has unmet financial needs for income, investments, and cross-border transfers,” Ong said. “These are conditions in which cryptocurrency can gain traction.”

In South Korea, the second-largest Asia-Pacific market, trading in crypto is becoming as common as trading in shares, while new rules like the 2024 Virtual Asset User Protection Act are reshaping activity on major domestic exchanges, according to the report.

Vietnam, in third, showed crypto as everyday infrastructure for remittances, gaming and savings rather than speculation, the report added, while Pakistan added a fourth archetype with a young, mobile-first population embracing cryptos for remittances and investments.

Anndy Lian, a Singapore-based intergovernmental blockchain adviser, noted that key contributors to crypto’s rapid growth included adoption in emerging markets such as India, Pakistan and Vietnam for practical use, such as remittances, to provide a financial tool to unbanked populations – people without their own bank accounts – in the region.

“High mobile penetration and internet expansion have democratised entry, enabling retail investors to engage with centralised exchanges and decentralised protocols amid economic volatility,” Lian said.

Institutional interest in the digital currency has also risen, fuelled by progressive hubs like Singapore and Hong Kong which offer clearer fintech ecosystems, according to Lian, while emerging economies such as Indonesia and the Philippines also use crypto to boost financial inclusion.

Cryptocurrency, which works as a decentralised digital currency using blockchain technology to securely record transactions on a shared, unchangeable digital ledger, is being seen by observers as a means to transparently send money to remote populations with little access to banking.

The region’s uneven approach to regulation of cryptos, however, hampers its potential use, experts warn.

“Regulatory concerns in Apac’s [the Asia-Pacific’s] crypto landscape are pronounced, arising from inconsistent and fragmented frameworks that amplify risks while stifling balanced growth,” Lian said.

While Singapore provides comprehensive licensing for virtual asset providers, India’s levy of a 30 per cent tax on cryptocurrency gains means investors and businesses face uncertainty and systemic risks of over-regulation, according to Lian.

Experts say India’s approach to cryptos stems from anti-money laundering and countering terrorism financing, but the country would gain from broader regulation dealing with consumer protection, financial prudence and market conduct.

Lian noted that there were concerns among policymakers as the Asia-Pacific region had emerged as a hotspot for crypto scams and frauds globally.

“Broader issues include money-laundering vulnerabilities in less-regulated markets like the Philippines or Vietnam, where rapid growth exposes unbanked users to exploitation,” he said.

Crypto rules vary across the region, from rigorous oversight in Japan to light-touch regulation in Indonesia.

Lian warned, however, that the lack of uniformity risked regulatory arbitrage – exploiting differences or gaps in regulations across different jurisdictions – and hampered cross-border compliance,

He called on policymakers to address these issues to mitigate threats without curbing the region’s crypto potential, noting that policy coordination “is essential to streamline crypto transactions, reduce fragmentation, and harness the region’s growth potential sustainably”.

Source: https://www.scmp.com/week-asia/economics/article/3326725/asia-pacific-leads-boom-crypto-transactions-amid-regulatory-hurdles-report

Anndy Lian

www.anndy.com

j j j

August 19th, 2025

Powell’s speech could trigger a market meltdown or a crypto boom

As the world turns its eyes toward a pivotal week in global economics, the stage is set for a series of data releases that could reshape market expectations and investor sentiment. On Thursday, August 21, 2025, flash Purchasing Managers’ Index surveys from S&P Global will roll out, providing the earliest glimpses into August’s business activity across major developed economies like the United States, the Eurozone, the United Kingdom, and Japan.

These indicators arrive at a critical juncture, following the recent implementation of higher US tariffs on August 7, which have already begun to ripple through supply chains and pricing dynamics. Investors will dissect these PMI figures for signs of resilience or strain, particularly in the manufacturing and services sectors.

Complementing this, inflation reports from various nations will add layers of complexity: Canada’s consumer price index lands on Tuesday, August 19, the UK’s on Wednesday, August 20, the Eurozone’s harmonised index on Friday, August 22, and Japan’s national CPI also on Friday.

The Federal Reserve’s minutes from its July meeting, due Wednesday, August 20, will offer clues about policymakers’ thinking on interest rates, while the annual Jackson Hole Economic Symposium, running from August 21 to 23, promises speeches from central bankers, including Fed Chair Jerome Powell’s address on Friday. This confluence of events comes amid a backdrop of trade tensions and shifting monetary policies, making it a high-stakes period for gauging the health of the global economy.

In the United States, the flash PMI data holds particular weight as the first major release since the tariffs took effect. President Trump’s administration pushed through these measures, elevating import duties on a broad swath of goods from key trading partners, marking the highest tariff levels since the Great Depression. Economists at the Yale Budget Lab estimate that these changes could shave 0.5 percentage points off US real GDP growth for both 2025 and 2026, while also fuelling inflationary pressures through higher input costs.

The tariffs aim to protect domestic industries and rectify trade imbalances, but early indicators suggest they disrupt supply chains and elevate prices for consumers and businesses alike. July’s consumer price index came in softer than anticipated, offering some relief, but any uptick in the PMI’s output prices sub-index could signal renewed inflation risks, potentially derailing hopes for aggressive rate cuts. Manufacturing inventories also draw scrutiny, as July data hinted at a reversal in building activity, possibly exacerbated by tariff-induced caution among firms.

The US has outperformed peers in recent quarters, bolstering global growth, but these trade developments test that momentum. If the PMI shows contraction in manufacturing, say, dipping below the 50 threshold, it might amplify calls for the Fed to ease policy more swiftly, especially if services hold steady.

Beyond the US, flash PMI readings from other developed economies will illuminate how these tariffs reverberate internationally. The Eurozone, already grappling with sluggish growth, could see its manufacturing sector further pressured by reduced US demand for exports, given America’s role as a major trading partner.

The United Kingdom, post-Brexit, faces similar vulnerabilities, with its PMI likely reflecting ongoing adjustments to global trade shifts. Japan’s data might reveal resilience in its export-oriented economy, though higher costs from tariffs on components could weigh on margins.

Even India, as a fast-growing emerging market, releases business sentiment updates this week, and analysts watch closely for any slowdown amid threats of reciprocal tariffs or diverted trade flows. These international snapshots matter because they feed into a broader narrative of interconnected growth. If PMIs across the board indicate softening, it strengthens the case for coordinated monetary easing among central banks, but divergent outcomes—such as US strength versus European weakness—could widen currency fluctuations and complicate investment strategies.

Inflation figures this week add another dimension to the puzzle, with the potential to sway central bank decisions. In the UK, Wednesday’s CPI report is forecasted to show a headline increase, building on recent PMI price signals that pointed to rising pressures. July’s data already introduced uncertainty around the Bank of England’s rate path, and a hotter-than-expected print could temper expectations for further cuts after its recent pivot.

The Eurozone’s harmonised CPI on Friday might underscore persistent services inflation, challenging the European Central Bank’s efforts to normalise policy. Japan’s core CPI, excluding fresh food, could edge higher due to wage growth and energy costs, testing the Bank of Japan’s gradual tightening stance.

Canada’s data on Tuesday precedes its own central bank’s moves, where softer inflation has opened the door to easing. Collectively, these releases test the narrative of disinflation that has dominated 2025 so far. If numbers surprise to the upside, markets might price in fewer rate reductions, pressuring equities and bonds, while downside surprises could fuel risk-on rallies.

The Federal Reserve’s July minutes, released midweek, will be parsed for any hints of discord among officials on the pace of cuts. July’s meeting maintained rates, but dovish undertones emerged in subsequent communications, with markets now betting on at least a 25-basis-point reduction in September. The minutes could reveal debates over labor market softening or inflation’s trajectory, especially in light of the tariffs’ potential to stoke prices.

Then comes Jackson Hole, the Fed’s marquee event in Wyoming, where Powell’s speech often sets the tone for autumn policy. Past symposiums have unveiled major shifts, like 2022’s hawkish pivot, and this year’s theme of reevaluating economic resilience amid trade wars adds intrigue.

Other central bankers, including those from the ECB and BOE, may chime in, offering cross-Atlantic perspectives. In my view, these gatherings underscore a delicate balancing act: policymakers must navigate tariff-induced uncertainties without overreacting, as premature tightening could tip economies into recession, while excessive easing risks rekindling inflation.

Shifting gears to the cryptocurrency markets, which often amplify broader economic signals, Bitcoin’s recent price action captures the volatility inherent in risk assets during uncertain times. The leading cryptocurrency rocketed to a fresh all-time high above US$124,100 earlier this month, only to retreat under bearish pressure, stabilising around US$118,000 over the weekend. On-chain analytics from Glassnode highlight critical support levels at US$117,500 and US$114,500, based on the cost basis distribution metric, which maps where investors acquired their holdings.

This heatmap reveals clusters of 72,900 BTC bought near US$117,500 and 56,201 BTC around US$114,500, suggesting these zones could act as cushions. Investors at these levels, many still in profit, might defend their positions by accumulating more, creating buying pressure that prevents deeper declines. However, a breach below US$114,500 opens the door to sharper corrections, as Glassnode data shows sparse support beneath, potentially targeting the US$110,000 to US$112,000 range where short-term holder cost bases cluster.

Recent posts on X from Glassnode emphasise this “air gap” of low liquidity between US$110,000 and US$116,000, filled gradually during dips but requiring stronger demand to solidify. In my perspective, Bitcoin’s resilience stems from its maturation as an asset class, with institutional adoption providing a floor even as macroeconomic headwinds like tariffs loom.

Ethereum, meanwhile, demonstrates bullish undercurrents through institutional flows and ecosystem growth. Over 200,000 ETH, valued at roughly US$888 million, exited centralised exchanges like Binance and Coinbase in a single day recently, the largest outflow since July 2025, signalling long-term holding or over-the-counter deals that reduce sell pressure.

This mirrors patterns preceding Ethereum’s 2024 rally from US$2,600 to US$4,000. Spot Ethereum ETFs have seen assets under management swell 57 per cent in the past 30 days to US$22.58 billion, with inflows like BlackRock’s US$338 million addition on August 15 underscoring demand despite occasional net outflows.

Stablecoin holdings on Ethereum hit an all-time high of US$130 billion, with USDC’s monthly transfer volume reaching US$8.6 billion, positioning the network as a hub for liquidity ready to rotate into altcoins as Bitcoin dominance slips 1.78 per cent weekly. These metrics suggest Ethereum benefits from capital shifts, especially if economic data this week bolsters rate-cut bets, lowering yields on traditional assets and driving flows into crypto.

Tying it all together, the interplay between these economic releases and crypto markets hinges on interest rate expectations. Tariffs introduce inflationary risks that could force central banks to pause easing, pressuring high-beta assets like Bitcoin and Ethereum.

If PMIs and inflation data reveal softening growth without runaway prices, the Fed and peers might accelerate cuts, injecting liquidity that historically lifts cryptos. In my opinion, the US economy’s outperformance provides a buffer, but global fragilities, amplified by trade barriers, warrant caution.

For crypto, the institutional accumulation in Ethereum and Bitcoin’s on-chain supports paint a constructive picture, potentially setting up for new highs if Jackson Hole delivers dovish signals. Investors should monitor price reactions closely, as these events could either cement a soft landing or ignite volatility.

Ultimately, while short-term turbulence persists, the long-term trajectory for both traditional and digital assets leans toward adaptation and growth, provided policymakers strike the right balance. This week’s data will be instrumental in charting that course, reminding us that in an interconnected world, no market operates in isolation.

Source: https://e27.co/powells-speech-could-trigger-a-market-meltdown-or-a-crypto-boom-20250818/