Key takeaways:

• War, rising oil prices and Strategy’s Bitcoin sales put extra pressure on BTC’s $60,000 support.
• Strategy’s Bitcoin sales and fears that a global regulatory crackdown on crypto is being reignited are adding to fragile crypto market conditions.

Bitcoin traded down 3.5% on Wednesday as new developments in the US-Iran war pushed oil prices higher and Japan’s bond markets faced renewed stress. That combination triggered broader de-risking across markets. At the same time, concerns over potential Bitcoin sales from Strategy intensified, with traders now bracing for a possible correction below $60,000.

Nasdaq-100 futures (left) vs. Bitcoin/USD (right). Source: TradingView

Bitcoin’s failed attempt to reclaim $64,500 on Monday coincided with a downtrend in the tech-heavy Nasdaq Index. However, the stock market recovered some of its losses on Wednesday while Bitcoin was unable to bounce back from the $62,000 level. This underperformance suggests something else might be pressuring the cryptocurrency.

The surge in Brent crude oil to $74 from $68 the prior week raised inflationary risks due to disruptions in energy supplies following the official breakdown of the US-Iran memorandum of understanding. US President Donald Trump declared the deal “over” after US strikes targeted Iranian sites in response to vessel attacks.

Higher energy costs feed directly into broader price pressures, reducing the likelihood of near-term Federal Reserve (Fed) interest rate cuts and limiting odds of economic stimulus packages. 

Implied odds for FED Funds target rate on Sept. 16. Source: CME FedWatch Tool

Traders are currently pricing 69% odds of interest rate hikes by September, up from 42% one month prior. This environment weighs heavily on risk assets, with Bitcoin still not widely perceived as an effective hedge.

Global economic uncertainty amid Strategy’s sell pressure

Adding to the cautious mood, President Trump demanded an end to US trade with Spain at the NATO summit, labeling the key ally a “wasted cause” for failing to commit to new defense spending targets. Such trade frictions risk slowing global economic activity and amplifying fears of global economic contraction.

Japan 10-year government bonds yield. Source: TradingView

In Japan, government bond yields jumped to a 30-year high, reflecting fears over a lack of central bank independence as the government attempts to adjust the Japan Central Bank’s policy mandate to “achieve a stronger economy.” Japan is the largest foreign holder of US Treasuries, which heightens the risk of global contagion.

The latest round of Bitcoin sales, totaling $216 million, announced by Strategy (MSTR US) on Monday, negatively surprised many after it was revealed that they occurred outside the core $1.25 billion Monetization Program. The company’s 8-K filings stated the program accounts only for proceeds used to fund its cash reserves.

Investors now fear persistent selling pressure from Strategy as the company manages its capital structure and debt obligations, with total annual dividends of $1.76 billion alone. Moreover, Strategy holds over $3.8 billion in convertible debt with the earliest call date before April 2027.

Related: Lyn Alden says Bitcoin needs no savior as Strategy sells $216M of BTC

Strategy convertible debt maturity and market value, USD. Source: Strategy

On the regulatory front, documents show India’s central bank strongly backing policies that lean toward prohibiting crypto activities, including barring banks from any exposure to virtual assets to safeguard financial stability. The India tax department additionally highlighted risks of evasion.

The signals of tightening global oversight add another layer of negative pressure on Bitcoin’s price and market sentiment. Bitcoin bears remain in control, with risk appetite diminishing due to socio-political instability, prospects of a more restrictive US Fed monetary stance, and Strategy’s ongoing cash needs.

Sentiment is likely to remain fragile, making a retest of the $60,000 support level increasingly probable in the near term.

Key Takeaways

• Bank of England confirms Farage’s lobbying had zero impact on digital pound strategy.
• Governor Bailey states the institution identified and rejected crypto-related pressure.
• Reform UK leader faces increasing questions about party funding and crypto donor connections.
• Connections to Tether-affiliated donors spark additional concerns about CBDC opposition.
• Central bank maintains digital pound development proceeds independently of political interference.

The Bank of England has confirmed that Nigel Farage’s attempts to sway its digital pound policy through direct lobbying proved unsuccessful. In a statement to Labour MP Joe Powell, Governor Andrew Bailey revealed that the institution successfully identified the lobbying efforts and maintained its independent stance. This disclosure has intensified examination of Farage’s connections to cryptocurrency-affiliated donors and the funding sources for Reform UK.

Central Bank Maintains Policy Independence After Farage Consultation

Bailey’s comments came in response to inquiries regarding a confidential September meeting with Farage at the Bank’s Threadneedle Street headquarters. During this consultation, multiple topics were discussed, including digital asset regulation and the Bank’s exploratory work on a digital pound. Officials confirmed that Farage’s representations resulted in no alterations to existing policy directions.

Farage had specifically pressed Bailey to abandon the central bank digital currency initiative. Speaking at a subsequent cryptocurrency industry gathering, he publicly acknowledged confronting Bailey about the programme. Bailey’s response emphasized the Bank’s capability to recognize advocacy efforts and maintain policy independence.

The controversy has acquired greater political significance following investigations into Farage’s financial backing. Reports suggest he received approximately £5 million from cryptocurrency entrepreneur Christopher Harborne. Harborne maintains business relationships with Tether, a prominent stablecoin operator that has publicly opposed central bank digital currency initiatives.

CBDC Controversy Intensifies Amid Reform UK Financial Questions

The BoE continues its exploratory work on a potential digital pound, though no implementation decision has been finalized. Bank officials emphasize that any progression would necessitate extensive additional research and comprehensive public engagement. Furthermore, both parliamentary approval and government backing would be prerequisites for any deployment.

Farage has consistently positioned himself against central bank digital currencies, characterizing them as potential infringements on individual liberty. He has additionally suggested connections between the digital pound concept and digital identity infrastructure. However, the Bank of England’s official proposals contain no such integration.

Tether representatives have actively campaigned against the Bank’s digital pound research programme. Their position emphasizes concerns that a government-backed digital currency could undermine the market for private stablecoins. These arguments have attracted renewed attention given Harborne’s partial ownership stake in Tether alongside his financial support for Reform UK.

Parliamentary Resignation Amplifies Scrutiny of Cryptocurrency Connections

Farage stepped down from his parliamentary seat this week while maintaining his innocence regarding allegations about financial disclosure requirements. He advocated for a by-election positioned as a referendum on establishment politics. Nevertheless, mainstream political parties announced they would not field candidates in such a contest.

The parliamentary standards investigation now subjects Reform UK to enhanced oversight. Labour parliamentarians have demanded investigations into whether Farage violated regulations governing lobbying activities. Bailey’s correspondence reinforces the Bank’s position that its policy development remained insulated from external political influence.

The Bank of England has also recently revised its regulatory framework for stablecoins following industry consultation. While it removed a proposed ceiling on stablecoin holdings, Bailey explicitly rejected suggestions that Farage influenced this modification. The central bank continues to assert that cryptocurrency policy formulation operates independently of political considerations.

The XRP Ledger has surpassed 1 million AI-driven payments through the x402 protocol as Ripple-backed t54.ai has launched a dedicated AI Hub for developers, payment services, and autonomous agents building on the network.

According to a post on X from Ripple-backed t54.ai, the new XRPL AI Hub brings together AI projects, agents, developer tools, payment services, and technical resources into a single platform designed to help users discover and build applications on the XRP Ledger. The company said the hub was launched with support from Ripple developers and the XRP Ledger Foundation.

Tokenized stock transfers more than doubled over the past month to $8.41 billion, according to RWA.xyz data, as activity in onchain equity markets continued to accelerate.

The sector’s distributed value also climbed 43% over the same period to $2.16 billion, while the number of holders increased 17% to more than 409,000, according to the data platform.

Growth was led by several of the market’s largest tokenization platforms. Figure’s distributed value surged 935% over the past 30 days, while Securitize’s rose 332% and xStocks’ increased around 62%.

Ondo remained the largest tokenized stock platform by distributed value at roughly $846 million, followed by xStocks with about $708 million, Securitize with $306 million and Figure with $239 million, according to the data.

Tokenized stocks. Source: RWA.xyz

Tokenized equities outperformed other segments of the RWA market. Distributed value for tokenized US Treasurys, the sector’s largest asset class, was essentially flat over the past month, while the broader tokenized RWA market grew about 4% to $33.5 billion.

Related: Tradeweb executes real-time tokenized US Treasury transaction on Canton Network

Crypto and Wall Street race to tokenize stocks

The tokenized stock market has grown from roughly $378 million to $2.16 billion over the past year, a gain of about 471%, according to RWA.xyz data.

The growth has coincided with a wave of new tokenized equity offerings across crypto exchanges. During the SpaceX IPO, Kraken, Bybit and Bitget Wallet used xStocks infrastructure to offer tokenized pre-IPO access. Although customer demand exceeded the available share allocation, it highlighted growing investor appetite for blockchain-based securities.

The momentum has spread to public markets. Earlier this month, Securitize became the first newly public company to issue tokenized versions of its shares on the Solana and Avalanche blockchains as it debuted on the New York Stock Exchange.

Some of the biggest names in traditional finance have also been accelerating their own tokenization efforts. In May, the DTCC announced plans to launch a tokenized securities service in October after receiving regulatory approval to offer tokenization services on pre-approved blockchains under a three-year pilot.

Source: The_DTCC

Earlier this year, the New York Stock Exchange and parent company Intercontinental Exchange unveiled plans for a platform to trade tokenized stocks and ETFs, while Nasdaq partnered with Kraken and infrastructure firm Backed to develop technology linking traditional equities with blockchain networks.

As competition between crypto-native and traditional finance firms intensifies, ICE CEO Jeffrey Sprecher has urged regulators to allow traditional exchanges to offer 24/7 onchain perpetual futures, arguing regulated venues should be able to compete with crypto-native platforms.

Magazine: Bitcoin decouples from tech stocks, Ether eyes ‘selling wave’: Market Moves

The Federal Reserve has warned that strong artificial intelligence-related demand could keep inflation elevated, while market pricing for a U.S. interest rate hike this year has climbed above 59%.

According to the minutes of the Federal Reserve’s June Federal Open Market Committee meeting, policymakers discussed several paths for monetary policy depending on how inflation and the labor market develop.

One of the scenarios considered involved inflation staying above the central bank’s 2% target despite a stable labor market, driven by strong AI-related demand, the conflict in the Middle East, or the effects of tariffs.

Under those conditions, the minutes showed that almost all participants believed additional policy tightening would likely be needed to bring inflation back to the Fed’s target. At the same time, the document outlined an alternative scenario in which inflationary pressures ease, allowing inflation to move back toward 2%.

Elevated inflation keeps tightening on the table

In the event inflation begins to cool, almost all participants said maintaining the current federal funds rate or eventually lowering it would likely be appropriate, according to the meeting minutes.

The June meeting ultimately ended with the Federal Reserve leaving interest rates unchanged, the first policy meeting chaired by Kevin Warsh since taking over as Fed chair.

The minutes also revealed differences among policymakers over where interest rates should finish the year. Many participants projected that the appropriate federal funds rate would be within or slightly below the current target range by year-end. Others, however, judged that rates should end the year above the current range, highlighting continued uncertainty over the inflation outlook.

Separately, a few participants argued there was already a case for raising rates because upside inflation risks remained elevated while downside risks to the labor market had eased somewhat. Even so, those officials still supported leaving the policy rate unchanged at the June meeting.

Markets continue pricing another rate increase

While policymakers debated multiple scenarios, prediction markets have increasingly leaned toward another rate hike before the end of the year. According to Polymarket data, traders currently assign a 59% probability that the Federal Reserve will raise interest rates in 2026.

Those odds have increased this week following renewed tensions between the United States and Iran after President Donald Trump threatened additional military strikes against Iran, adding another potential source of inflation risk alongside energy market uncertainty.

Meanwhile, expectations for the Fed’s next meeting remain more balanced. According to the CME FedWatch Tool, there is a 69.5% probability that policymakers will leave interest rates unchanged at the July FOMC meeting. Although that remains the most likely outcome, the probability has declined from around 80% over the past week.

Current CME FedWatch pricing also shows a 30.5% chance of a rate increase in July, indicating that investors have become less certain that the Fed will be able to keep borrowing costs unchanged if inflation risks continue to build.

Taken together, the June meeting minutes indicate that Federal Reserve officials continue to view incoming inflation data as the deciding factor for future policy. While many members still see room to hold or eventually lower rates if price pressures ease, persistent inflation driven by AI demand, geopolitical developments, or tariffs could still push the central bank toward another rate hike later this year.