The Week of Inflation

Find our most recent reports in collaboration with Bybit below:

• Bybit x Block Scholes Quarterly Report: What will drive crypto in Q3 2025?

• Bybit x Block Scholes July Volatility Review

• Bybit x Block Scholes Quarterly Report: Altcoin season and the evolving role of Bitcoin

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Daily Updates:

• This week’s attention is focused on the Federal Reserve’s September 17 meeting, where policymakers are set to decide on potential rate cuts. Market expectations are heavily skewed toward a 25 basis point reduction, with CME futures implying a 94% probability of such a move.
• President Donald Trump reported that he expects “a big cut” at the meeting on Wednesday, according to Bloomberg, despite the widely expected 25bps reduction.

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• Despite the decision coming amid inflation readings that remain well above the Fed’s 2% target, with August’s CPI at 2.9% YoY, a slew of recent labour market data releases has indicated greater weakness in the labour market than was previously thought: Initial Jobless Claims rose to 263K in the first week of September, the most since October 2021.
• The Bureau of Labour Statistics also revised down job growth, reporting 911K fewer jobs created for the year ending March 2025 than was previously estimated.

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• On the same day as the U.S. Federal Reserve’s policy decision, both the euro area and the U.K. will release their inflation data.
• Euro area headline inflation is expected to tick up to 2.1% in August, while U.K. inflation is forecast to remain steady at 3.8%.

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• China’s economy showed signs of slowing in August 2025. Retail sales grew 3.4% YoY, below market expectations of 5.0% and down from 3.7% in July, marking the slowest pace since November 2024 and the third consecutive month of deceleration.
• At the same time, China’s surveyed unemployment rate edged higher to 5.3% from 5.2% in July, the highest level since February 2025.

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• The ETH/BTC spot price ratio remains under pressure, despite ETH's explosive summer rally and growing institutional adoption. Following July and August’s historic surge, ETH climbed to a new all-time high of $4,957 before easing to around $4,600, but the ratio sits at just 0.039.
• Despite a small early morning slide in spot prices at the beginning of the week, derivatives markets positioning remains largely unchanged from the weekend.
• Friday saw a recovery in sentiment across the board as BTC and ETH volatility smiles recovered from their sharp skew towards OTM puts. This was matched by a move higher in funding rates as traders price out what remained of the demand for short exposure over the weekend.
• A small lift in front-end volatility levels is the only hint of the pivotal FOMC meeting ahead on Wednesday – following the last week’s CPI release, there is now little uncertainty priced-in by the market over the decision that the Fed will take.
• However, the divergence between outright volatility levels between the two majors remains at extended levels: ETH volatility is still nearly two times that of BTC across the term structure, despite the levels of volatility implied by both options markets falling over the last week.

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• According to onchain data, Galaxy Digital has purchased 1.2M SOL (approximately $306M) in the last 24 hours, bringing its total purchases over the past five days to around 6.5M SOL (approximately $1.55B).
• This follows Galaxy’s collaboration with Multicoin Capital and Jump Crypto on a $1.65B private placement in Solana treasury accumulation strategy Forward Industries.
• SOL is down close to 5% over the past 24hrs, in line with the broader market, but remains up more than 24% for the month, with over half of those gains coming in the past week.

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• Native markets has secured the bid for Hyperliquids upcoming stablecoin, USDH.
• They have proposed to reinvest the stablecoin reserve yield back into Hyperliquid projects with 50% towards USDH promotional material and expansion while 50% will go to the Hyperliquid Assistance Fund which is primarily used to buy back $HYPE tokens on the open market.
• USDH will be GENIUS-ACT compliant across the US and EEA, fully backed by cash and US Treasury equivalents, with off-chain reserves initially managed by BlackRock and on-chain reserves overseen by Superstate via Bridge.

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• Ethereum’s stablecoin ecosystem reached a new milestone this week, with total supply on the network hitting a record $166B as of September 13, up from $149B a month earlier.
• USDT continues to dominate, accounting for $87.8B, followed by USDC at $48B.

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This Week’s Calendar:

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Charts of the Day:

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