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The great divergence: How US inflation, jobless claims, and crypto charts are clashing ahead of the Fed’s big decision

The great divergence: How US inflation, jobless claims, and crypto charts are clashing ahead of the Fed’s big decision

As the calendar flips to September 12, 2025, financial markets around the world hum with a mix of optimism and caution, driven by recent economic data that has solidified expectations for the Federal Reserve’s upcoming policy moves.

Global risk sentiment remains broadly positive, with Asian equities edging close to all-time highs in early trading sessions, buoyed by encouraging signals from US inflation figures and labour market indicators. Hong Kong and mainland Chinese markets have taken the lead in this upward push, reflecting renewed investor confidence amid hopes for monetary easing.

Meanwhile, US stock futures point to a flat opening, suggesting a pause after the previous day’s gains, where the S&P 500 climbed 0.9 per cent, the Nasdaq advanced 0.7 per cent, and the Dow Jones surged 1.4 per cent. This rally in US equities stems largely from growing anticipation that the Fed will deliver an interest rate cut at its September 17 meeting. This move could inject fresh liquidity into risk assets and extend the current uptrend.

Looking into the latest US economic releases, the August consumer price index revealed a nuanced picture of inflation dynamics. Core prices, which strip out volatile food and energy components, increased by 0.3 per cent monthly and 3.1 per cent year-over-year, aligning closely with economist projections and signalling that underlying inflationary pressures remain contained but persistent.

Headline CPI ticked up by 0.4 per cent in August, marking an acceleration from prior months and pushing the annual rate to 2.9 per cent, the highest since early 2025. This uptick can be attributed in part to businesses preemptively passing on costs related to anticipated tariffs under the Trump administration’s trade policies, which have begun to ripple through supply chains and consumer goods pricing.

Concurrently, weekly jobless claims surged to 263,000, the highest level in nearly four years and exceeding market forecasts, highlighting emerging softness in the labor market. This jump in unemployment filings, combined with a slight rise in the jobless rate to 4.2 per cent in August, underscores a weakening employment landscape that has pulled the Fed in conflicting directions: persistent inflation argues for caution, while labor market fragility demands stimulus.

Despite these tensions, the data has cemented bets on a rate reduction, with markets pricing in a 100 per cent chance of at least a 25 basis point cut next week, and roughly 50 per cent odds of a more aggressive 50 basis point move.

Bond markets have reacted accordingly, with US Treasuries posting gains overnight. The 10-year yield dipped 2.5 basis points to 4.02 per cent, while the 2-year yield edged down 0.2 basis points to 3.54 per cent, reflecting investor flight to safety amid the mixed economic signals. The US Dollar Index consolidated with a modest 0.3 per cent decline, as traders weighed the implications of looser policy on currency strength.

Commodities presented a more varied picture: gold slipped 0.2 per cent, maintaining its role as a hedge against uncertainty, but Brent crude tumbled 1.7 per cent below US$67 per barrel, pressured by ongoing oversupply fears from OPEC+ production and sluggish global demand. These movements illustrate a market in transition, where the promise of Fed easing supports equities and bonds, yet commodity weakness hints at underlying economic headwinds that could temper the enthusiasm.

Turning to the cryptocurrency space, Bitcoin has captured particular attention with its 1.55 per cent rise over the past 24 hours, outpacing the broader crypto market’s 1.83 per cent gain. This daily uptick aligns with a weekly advance of 3.82 per cent, though it trails behind monthly and quarterly averages, down 3.1 per cent and 3.6 per cent, respectively.

As of September 12, 2025, Bitcoin hovers around US$114,290, having rebounded from recent lows near US$111,500 but still testing resistance at US$115,000. This price action occurs against a backdrop of several bullish catalysts. Foremost among them is the heightened probability of Fed rate cuts, which historically boost risk-on assets like cryptocurrencies by lowering borrowing costs and encouraging investment in high-growth sectors. Markets now assign 50 per cent odds to a 50 basis point cut on September 17, a scenario that could flood the system with liquidity and propel Bitcoin higher.

Additionally, regulatory tailwinds from the SEC’s proposed generic listing standards for crypto ETFs promise to streamline approvals for altcoin products, potentially accelerating inflows and broadening market participation. The agency has already greenlit in-kind creations and redemptions for crypto exchange-traded products in August 2025, aligning them with traditional commodity funds and reducing operational frictions. Complementing this, stablecoin reserves on exchanges have swelled to a record US$70 billion, indicating ample dry powder for buying but also raising concerns about potential selling pressure if sentiment sours.

However, beneath this surface buoyancy lurk technical signals that suggest Bitcoin’s uptrend may be faltering. The cryptocurrency has formed a rising wedge pattern on its charts, characterised by two ascending and converging trendlines that often precede bearish reversals. As these lines approach their apex, the risk of a breakdown intensifies, with analysts warning of a potential drop below US$100,000 if support levels give way. The Average Directional Index, a key trend strength indicator, has retreated from a year-to-date peak of 60 to around 24, pointing to diminishing momentum in the current rally.

Compounding this, the Relative Strength Index exhibits a bearish divergence, where the oscillator forms a descending channel even as prices climb, a setup that frequently heralds strong downward breakouts. Recent analyses highlight this divergence on weekly timeframes, with RSI flashing triple bearish signals that echo historical fragility points in equities, such as the 1998 LTCM crisis or the 2008 financial meltdown.

Moreover, Bitcoin’s price action mirrors patterns from past cycles, including a potential double top reminiscent of 2021, which preceded a 77 per cent correction. September’s historical underperformance, averaging negative returns since 2013, adds another layer of caution, with some projections eyeing a dip to US$108,802 or even US$88,000 in a deeper pullback.

Sentiment on social platforms like X reflects this dichotomy, with users debating the Fed cut’s implications. Some warn of a “sell the news” event, where Bitcoin rallies in the lead-up to the announcement only to crash afterward, as the cut, whether 25 or 50 basis points, may already be fully priced in by participants.

Posts highlight JPMorgan’s caution that easing might not trigger a uniform risk-on surge, potentially sparking a broader market dump. Others point to whale selling pressure, with over 100,000 BTC offloaded recently amid frozen corporate buys, and miner outflows turning bearish post-halving.

Bullish voices counter with observations of institutional accumulation, including 1,417 entities holding over 1,000 BTC each, and daily corporate purchases averaging 1,400 BTC, signaling long-term confidence. Threads discuss Bitcoin’s resilience, noting hidden bullish divergences in RSI near oversold levels and a flattening MACD, which could catalyse a rebound if liquidity flows resume. One prominent analyst frames the setup as a consolidation phase, with the Network Value to Transactions ratio at 1.51, well below overvaluation thresholds, suggesting sustainable growth driven by utility rather than speculation.

In my view, while the bearish technical indicators and historical September weakness pose genuine short-term risks, Bitcoin’s trajectory remains fundamentally upward over the longer horizon. The Fed’s impending cut, even if it triggers a knee-jerk selloff, will ultimately enhance liquidity in a way that benefits high-beta assets, such as cryptocurrencies, especially as dollar weakness from policy easing drives capital into alternatives like Bitcoin, often referred to as “digital gold.”

Regulatory progress on ETFs, coupled with surging stablecoin reserves, underscores growing institutional adoption that could absorb any temporary dips. Historical parallels, such as post-halving Septembers leading to Q4 surges, suggest this correction might be a buying opportunity rather than a prelude to collapse.

That said, a failure to hold US$113,500 support could accelerate downside toward US$100,000, validating the wedge breakdown. Investors should monitor the Fed’s decision closely: a 50 basis point surprise might ignite a rally to US$120,000, as some inverse head-and-shoulders patterns imply, while a cautious 25 basis point trim could extend the choppiness.

Overall, the interplay of macro easing and crypto-specific tailwinds tilts the scales toward optimism, provided global growth holds steady amid tariff uncertainties. This moment feels like a pivotal inflection point, where patience and data-driven positioning will separate winners from those caught in volatility’s grip.

 

Source: https://e27.co/the-great-divergence-how-us-inflation-jobless-claims-and-crypto-charts-are-clashing-ahead-of-the-feds-big-decision-20250912/

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

Crypto thrives as traditional markets falter: What’s driving the divergence?

Crypto thrives as traditional markets falter: What’s driving the divergence?

The recent retreat in global risk sentiment, spurred by escalating concerns over the rising US deficit, has sent ripples across various asset classes, from US equities and Treasuries to commodities and cryptocurrencies, painting a vivid picture of a market grappling with uncertainty.

The implications are profound, and the data tells a compelling story of shifting investor priorities and economic pressures. Let’s dive into this multifaceted topic, exploring how the US deficit is reshaping global markets and what it means for the future.

The growing unease about the US deficit is at the heart of this shift in risk sentiment. For months, economists and investors have voiced concerns about the ballooning federal deficit, but recent events have brought these worries to a boiling point.

A Bloomberg report from May 22, 2025, underscores this tension, noting that a proposed tax bill could add trillions to the deficit, further straining an already stretched fiscal framework. This has rattled investors, who fear that unchecked borrowing could lead to higher interest rates, persistent inflation, or even a loss of faith in the US economy’s long-term stability.

The bond market, often a bellwether for such concerns, is flashing warning signs—most notably through a weak 20-year Treasury auction and a pronounced bear steepening of the yield curve. This dynamic, where long-term yields are rising faster than short-term ones, reflects a market bracing for tougher times ahead.

Take US equities, for instance. The S&P 500, a broad barometer of American corporate health, plummeted by 1.6 per cent on Wednesday, marking its worst day in a month. The Dow Jones Industrial Average and Nasdaq Composite followed suit, shedding 1.9 per cent and 1.4 per cent, respectively.

This wasn’t a isolated stumble but a broad-based sell-off, signaling that investors are pulling back from riskier assets. Why? The rising deficit fuels fears of higher borrowing costs down the line, which could squeeze corporate profits and dampen economic growth.

Higher Treasury yields also play a role—when bonds offer better returns, stocks lose some of their luster, especially for those seeking steady income. It’s a classic flight from risk, and the numbers bear it out: the equity market is feeling the heat of this deficit-driven anxiety.

The US Treasury market offers even more insight into this unfolding narrative. On Wednesday, Treasuries experienced an aggressive bear steepening, a term that might sound arcane but simply means that long-term interest rates are climbing faster than their short-term counterparts.

Yields on tenors beyond 10 years surged by more than 10 basis points, while the 2-year yield, tethered to expectations of Federal Reserve policy, edged up a more modest 4.9 basis points to 4.019 per cent. This divergence is telling. The Fed might still be poised to cut rates in the near term—hence the relatively stable short-end yields—but the long end of the curve is screaming concern about the future.

Investors are demanding higher compensation for locking their money into longer-dated Treasuries, likely anticipating inflation or a flood of government borrowing to finance the deficit. The weak 20-year auction only amplifies this sentiment; when demand for these securities falters, it’s a clear sign that confidence is waning.

Interestingly, the US Dollar Index didn’t follow the script you might expect. Despite rising Treasury yields, which typically bolster the dollar by attracting foreign capital, the index fell 0.5 per cent to 99.60, marking its third consecutive day of declines. This counterintuitive move suggests that deficit worries are overshadowing the yield advantage.

If investors are losing faith in the US economy’s fiscal health, the dollar’s appeal dims, even with higher rates on offer. It’s a fascinating twist—while yields climb, the currency weakens, hinting at deeper structural concerns that could ripple globally.

Amid this turmoil, gold has shone brightly, rising 0.8 per cent to close at US$3,315 per ounce—its third straight day of gains. This isn’t surprising. Gold thrives in times of uncertainty, serving as a safe haven when faith in paper assets falters.

With the deficit stoking fears of inflation and economic instability, investors are flocking to this timeless store of value. It’s a hedge against the unknown, and right now, there’s plenty of that to go around. The data backs this up: gold’s steady ascent mirrors the retreat in risk sentiment, a textbook response to the current climate.

Oil, on the other hand, tells a different story. Brent crude slipped 0.7 per cent to settle at US$65 per barrel, pressured by a report showing US crude inventories at their highest since July. This drop reflects a broader worry: if the global economy slows under the weight of deficit-driven uncertainty, demand for oil could soften.

Rising inventories suggest an oversupply might already be in play, compounding the downward pressure on prices. It’s a stark contrast to gold’s rally—while one asset benefits from fear, another suffers from faltering growth expectations.

Beyond the US, global responses are adding layers to this saga. Bank Indonesia, for example, cut its benchmark interest rate by 25 basis points to 5.50 per cent, aligning with market expectations. The Deposit Facility and Lending Facility rates also dropped to 4.75 per cent and 6.25 per cent, respectively.

This move could be a preemptive strike to bolster domestic growth amid a shaky global backdrop, though it risks weakening the rupiah if risk sentiment continues to sour. It’s a delicate balancing act—stimulus now might cushion the blow, but it could also expose vulnerabilities later. For now, it’s a sign that central banks worldwide are watching the US deficit drama closely, adjusting their own playbooks accordingly.

Asia’s equity markets offer a mixed picture. While Wednesday saw broadly positive performances, early Thursday trading tracked Wall Street’s decline, suggesting the US slump is casting a shadow. Yet US equity index futures hint at a potential rebound at the open, a glimmer of optimism amid the gloom. Markets are volatile, reacting to each new headline about the deficit and its fallout. Investors are on edge, and rightly so—the stakes are high.

Then there’s the cryptocurrency angle, which has turned heads with its defiance of traditional market trends. Bitcoin rocketed to US$110,730 on Wednesday, a fresh all-time high, before settling just below US$110,000. This surge, a 47.82 per cent climb from its April 6 low of US$74,434, coincided with Bitcoin Pizza Day—a nostalgic nod to May 22, 2010, when Laszlo Hanyecz traded 10,000 Bitcoins for two pizzas, then worth US$41.

Today, those coins would fetch millions, a testament to Bitcoin’s meteoric rise. The timing feels symbolic, but the rally’s roots run deeper. Strong buying pressure and a shrinking supply on exchanges suggest investors are piling in, viewing Bitcoin as a hedge against the chaos in traditional markets.

Ethereum’s story echoes this resilience. Up two per cent in Thursday’s early Asian session, it reclaimed the US$2,500 level, buoyed by whale buying. Exchange supply has dwindled to 18.73 million ETH, the lowest since August 2024, with over 1 million ETH flowing to private wallets since late April.

This hoarding signals confidence in future gains, and it’s paying off—Ethereum’s upward trajectory holds firm despite the broader market wobble. Unlike equities or Treasuries, these digital assets seem to thrive on uncertainty, drawing in those disillusioned with fiat systems strained by deficits and debt.

So, what does it all mean? The rising US deficit has unleashed a cascade of effects, eroding global risk sentiment and reshaping asset valuations. Equities and Treasuries are reeling, gold is basking in safe-haven demand, and oil is buckling under growth fears.

The dollar’s weakness underscores a crisis of confidence, while cryptocurrencies like Bitcoin and Ethereum soar as alternative refuges. It’s a tale of divergence—traditional markets buckle under fiscal strain, while digital ones chart their own course.

Looking ahead, the implications are vast. If the deficit continues to swell, Treasury yields could climb further, squeezing equities and amplifying economic headwinds. Gold might keep rising, but oil could languish if growth stalls. Central banks like Bank Indonesia will face tough choices, balancing stimulus with stability.

And cryptocurrencies? Their trajectory hinges on whether they can sustain this momentum as viable hedges. For investors, the key is vigilance—understanding how these pieces fit together will be crucial in navigating what’s shaping up to be a turbulent road.

In my view, this moment is a wake-up call. The US deficit isn’t just a domestic issue; it’s a global fulcrum, tilting markets in ways we’re only beginning to grasp. The data—from yield curves to crypto wallets—paints a picture of a world in flux, where old assumptions are tested, and new opportunities emerge.

I’ll keep digging, tracking the numbers and the narratives, because this story is far from over. For now, the retreat in risk sentiment is a stark reminder: in finance, as in life, uncertainty is the only certainty.

 

Source: https://e27.co/crypto-thrives-as-traditional-markets-falter-whats-driving-the-divergence-20250522/

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