Traders Are Split 70-30 Ahead of Warsh's Second FOMC Decision

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In Today's Note

• Markets are unusually split ahead of Kevin Warsh's second FOMC meeting as Fed Chair, with traders pricing a 70% chance of a hold and 30% of a rate rise. BTC held between $63K and $64K awaiting the decision, last at $64.4K, while the rotation out of chipmakers pushed the equal-weight S&P 500 to a record high even as the Nasdaq-100 fell 0.98% toward a technical correction.
• Through July, ETH has sharply outperformed BTC, up around 22% against BTC's 7.2%, supported by a steadier stream of spot ETF inflows totalling $358.5M against eight days of BTC ETF outflows. Russia's FSB charged Telegram founder Pavel Durov with aiding terrorism, Morgan Stanley launched staked ETH and SOL trusts on NYSE Arca, and Zcash activated its Ironwood privacy upgrade.

Market Snapshot: Overnight Moves

Macro & Markets

• The rotation out of big-name chipmakers and into other sectors of the US stock market continued yesterday, as the Philadelphia Semiconductor Sector index plunged 4.49%, dragging the index down over 16% in the past month alone.
• Meanwhile, the cap-weighted S&P 500 rose a modest 0.21% and its equal-weighted version reached a record all-time high and is up 2% on the month.
• Alongside the selloff in chipmakers, the tech-heavy Nasdaq-100 ended yesterday’s session down 0.98%, putting that index on the brink of a technical correction.
• In crypto markets, BTC mostly traded between $63K and $64K as markets await Kevin Warsh’s second FOMC meeting as Fed Chair.
• Market expectations remain split, traders assign a 70% probability for a rate pause and a 30% probability for a hike, making today’s meeting one of the most uncertain meeting decisions in recent history.
• Through the month of July, ETH has actually outperformed BTC, supported by a more consistent streak of inflows into its spot exchange-traded fund products.
• BTC is up 7.2% in July while its ETF products have seen eight days of outflows over the same period (four consecutive days most recently with net flows amounting to $173M).
• ETH on the other hand has rallied almost 22%, with only four days of outflows from its spot ETF products and total net flows of $358.5M.
• Speaking on Fox News yesterday, Trump said, "I think we have a very strong position right now" and reiterated his threat to bomb Iran's major bridges if no agreement can be reached, but added "if I can avoid doing that, I'd like to do that."
• Also ongoing are talks between Iranian and Omanian negotiators to resume shipping through the Strait of Hormuz.
• Negotiators from both sides met in Tehran over the weekend and discussions are still ongoing, Omani officials claimed an announcement signaling progress could be made in the next few days however Tehran said it rejected Oman's recent offer for shared control over the strait.
• The optimistic stance from President Trump and four days of no conflict between the two sides was however punctuated by an abrupt Iranian attack on a US air base and a command centre in Jordan.
• Saudi Arabia said it intercepted drones launched by Tehran-backed militias in Iraq that were targeting its oil facilities. Shortly after that, the US military said the Islamic Revolutionary Guard Corps attacked American troops in the region with several ballistic missiles.
• Iranian media claimed the IRGC targeted a base in Jordan in response to “aggressive US actions”.
• That prompted American forces to join up with Saudi Arabia and strike the Iraqi militias.
• As such, oil prices snapped their three-day losing streak and surged around 4% to $88 per barrel.

DeFi / Web3 / Altcoins / Crypto

• Russia's Federal Security Service (FSB) has charged Telegram founder Pavel Durov with aiding terrorist activity and placed him on an international wanted list, with Reuters reporting that an international arrest warrant has been issued.
• The FSB alleges Telegram failed to remove channels, chats and bots used by Ukrainian special services, terrorist and extremist groups to coordinate sabotage, terrorism and cyber fraud inside Russia.
• The charges mark the latest escalation in Russia's long-running dispute with Telegram, which has reportedly been fined more than 100M rubles this year for failing to remove content prohibited under Russian law.
• Zcash, a privacy-focused blockchain, activated its Ironwood (NU6.3) upgrade at block height 3,428,143 on July 28, launching a new formally verified shielded pool and restricting the older Orchard pool to withdrawals following a previously disclosed vulnerability.
• Ironwood replaces Orchard as Zcash's primary privacy pool, reusing a patched zero-knowledge circuit while adding stronger formal verification, quantum-recoverable notes and new supply auditing features.
• The upgrade follows the discovery in May of a flaw in Orchard that could theoretically have allowed undetectable counterfeit ZEC, although developers said they found no evidence it was exploited.
• A coalition of attorneys general from 44 U.S. states urged the CFTC to withdraw its proposed rule on sports prediction markets, arguing the agency lacks the legal authority under the Commodity Exchange Act to regulate them.
• The group said sports betting has historically been regulated by states and warned the proposal would improperly expand federal oversight into an area traditionally governed by state law.
• The letter adds to an ongoing dispute over prediction markets, with Kalshi and Polymarket continuing to challenge state restrictions in courts across the U.S.
• Morgan Stanley has launched the Morgan Stanley Ethereum Trust (MSSE) and Morgan Stanley Solana Trust (MSOL) on NYSE Arca, with each charging a 0.14% sponsor fee, the lowest permanent fee among comparable U.S. products.
• The MSSE and MSOL funds will stake a portion of their ETH and SOL holdings, with 95% of staking rewards expected to be distributed to shareholders.
• Galaxy Digital, a digital assets and data centre infrastructure company, acquired 500 acres in McGregor, Texas to build its second AI and high-performance computing campus in the state, with an initial 74MW phase expected to receive power in 2028 and expand to several hundred megawatts by 2030.
• The project is expected to contribute at least $130M to the local tax base and follows the planned expansion of Galaxy's Helios campus to 1.63GW, supporting its 15-year AI infrastructure agreement with CoreWeave.
• The Bank of Russia has published draft rules for organised cryptocurrency trading, allowing exchanges to set their own trading procedures and calculate market and weighted-average prices for digital assets.
• The proposals would create regulated digital depositories that record crypto and digital-rights holdings, with minimum equity requirements ranging from ₽50M to ₽250M depending on their activities.
• The draft framework follows Russia’s proposed crypto market law, which would permit regulated retail trading while keeping the ban on using cryptocurrencies for domestic payments, and is expected to take effect in September if enacted.

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