Ethereum Attracts Record ETF Inflows and 39% Fee Drop in Q2, Supporting Stronger Outlook for Q3

Cryptocurrency

Summary:

The improvements are also registered in the derivatives market, where daily perpetual futures turnover averaged $51.4 billion, up 56% quarter‑over‑quarter.

Ethereum (ETH) registered significant improvements in the second quarter, including increased inflows of exchange-traded funds (ETFs), layer-2 activity, and liquidity, which enhance the prospects for the third quarter.

According to the “Charting Crypto Q3 2025” report by Coinbase and Glassnode, US-traded spot Ethereum ETFs captured $1.7 billion in net inflows last quarter, overturning the prior period’s outflows.

Institutional flows flip positive

Furthermore, layer‑2 throughput climbed 7%, while average user fees dropped 39%. This was followed by an 8% increase in liquid supply, while long‑dormant balances shrank 6%.

As a result of the improvements seen last quarter, the share of ETH held at a profit increased from under 40% to nearly 90%. Additionally, the total value locked on Ethereum reached $ 63.2 billion.

The improvements are also registered in the derivatives market, where daily perpetual futures turnover averaged $51.4 billion, up 56% quarter‑over‑quarter.

Aggregate inflows erased a first‑quarter $200 million leak and restored momentum for managers positioning ETH as the market’s second large‑cap crypto.

Futures open interest totaled $14.5 billion on June 30 despite a 6.9% quarterly pullback, highlighting deeper liquidity across regulated venues.

Meanwhile, options open interest stood at $ 5.3 billion, with derivatives desks also logging an 11% uptick in term‑futures volume, signaling growing hedging appetite.

Network activity and economics

Developers and users benefited from a 39% decline in base layer fees as rollups absorbed more transactions, sharpening the economics of on‑chain application deployment.

At the same time, Ethereum’s inflation rate remained modest, at approximately 0.75% annualized. This cushioned long-term supply pressure.

Staked ETH continued to climb, and the report plotted both total staked value and the associated annual yield among its core fundamentals tables.

On-chain analytics show that holders used the second-quarter price recovery to reposition. Liquid coins, defined as those moved within 90 days, rose 8%, whereas coins untouched for more than a year fell 6%.

This indicated controlled profit‑taking rather than wholesale distribution. ETH’s Net Unrealized Profit/Loss flipped from capitulation to optimism between the first and second quarters, aligning with market‑cycle models that track investor sentiment shifts.

The pool of coins sitting below cost plummeted from more than 40 million to fewer than 10 million over the same period.

DeFi collateral base and market share

Ethereum’s $63 billion total value locked (TVL) in the DeFi ecosystem is spread across lending, decentralized exchanges, and yield farming protocols.

Ether also expanded its slice of total crypto market capitalization alongside Bitcoin and Solana as investors rotated toward perceived blue‑chip assets.

Perpetual swap funding rates, tracked alongside Bitcoin and Solana, remained neutral to positive through late June, suggesting balanced speculative positioning rather than froth.

However, the report cautioned that sustained ETF inflows and favorable fee conditions must persist to maintain the second-quarter constructive backdrop.

Nevertheless, it noted that Ethereum now enters the third quarter with stronger institutional sponsorship, lower transaction costs, and a healthier on-chain profit profile.

Source: Cryptoslate

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Manuel

Central Bank

Forex

Chicago Federal Reserve president Austan Goolsbee on Friday expressed support for Jerome Powell and central bank independence when asked about pressure being applied by President Trump, saying the Fed chair is a “totally honorable guy.”

“I as well as a virtual unanimity of economists believe that central bank independence from political interference is absolutely critical to the operation of the Fed and of the economy,” Goolsbee said in an interview with Yahoo Finance.

“If you just look at places where they do not have independence for the central bank inflation is higher, growth is worse, unemployment and the job market do worse, and everyone knows that.”

He added that "it pains me to hear people actively discussing whether the central bank should be independent. There's nothing good can come of discussion like that."

His response follows an intense period of pressure from Trump and other White House officials frustrated with Powell’s wait-and-see approach to interest rates and his cautionary comments on the possibility of persistent inflation from Trump’s tariffs.

Trump’s allies in recent weeks used another tactic to turn up the pressure on Powell: They invoked a $2.5 billion renovation of the Fed’s headquarters as a way to question the chair’s management of the institution and whether he told Congress the truth about the project.

This past week Trump denied that he was planning to fire Powell imminently, but also left the door open to that possibility.

Goolsbee said he is a "big admirer" of Powell and considers him a "totally honorable guy" as well as a "first ballot hall of famer" without addressing any of specific criticism coming from the White House.

Goolsbee on Friday also echoed Powell’s caution on cutting interest rates, saying that “we don’t know until we know” how inflation will be affected by the “drip drip” of tariff announcements. Powell has been arguing that more time is needed to know if any of Trump's tariffs push inflation higher this summer.

Goolsbee said he is seeing tariffs push up prices on goods, but not spilling over into prices for services, saying that still keeps him in a “wait and see” mode.

A rolling, staggered implementation of tariffs, he noted, makes it more difficult to argue the impact of tariffs will be just be a one-time increase in prices.

“Anything that makes it harder to figure out if we are on a path back to 2% inflation is extending the timetable of when the rate cuts can happen,” said Goolsbee.

He declined to say whether he sees rate cuts in the fall months of this year, noting that if there are multiple more months of benign readings on inflation he would feel more comfortable cutting.

But if he started to see a ramp up in prices with higher tariff rates, then he said he would have to assess the impact.

“Rates can come down, but we don't know if we're on the path to 2% inflation because we don't know on tariffs on energy prices and geopolitics,” said Goolsbee. “We're going to have to wait and see what what's happening in the data.”

Fed governor Christopher Waller said Thursday he believes the central bank should cut rates at the next policy meeting on July 29-20, as he again argued that any inflation from tariffs would be temporary, underscoring a divide within the central bank.

He also hinted he may dissent at the July meeting if his colleagues decide to hold rates steady, which is what investors expect will happen. Odds priced in by traders for a rate cut in September only sit at nearly 60%.

Source: Yahoo Finance

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Manuel

Cryptocurrency

Political

The crypto sector's market value hit $4 trillion on Friday, according to CoinGecko, marking a milestone that reflects its shift from a nascent asset class to a central part of the global investment landscape.

A wave of renewed optimism, regulatory clarity in key markets and rising institutional flows have catapulted the crypto sector to a new valuation peak.

The U.S. House of Representatives passed a bill on Thursday to create a regulatory framework for U.S.-dollar-pegged cryptocurrency tokens, known as stablecoins, sending the bill to President Donald Trump, who is expected to sign it into law.

"The arrival of the Trump legislation signaled an about-turn in attitudes towards the crypto industry, but legislators are still exercising some caution," said Derren Nathan, head of equity research, Hargreaves Lansdown.

House lawmakers also passed two other crypto bills, sending them next to the Senate for consideration. One lays out a regulatory framework for crypto, while the other seeks to ban the U.S. from issuing a central bank digital currency.

The $4 trillion milestone underscores how far the crypto industry has come from its speculative, fringe origins. With growing interest from asset managers, new exchange-traded products and broader adoption among retail and corporate users, digital assets are increasingly shaping conversations in global finance.

Stablecoins, a type of cryptocurrency designed to maintain a constant value, usually a 1:1 dollar peg, are commonly used by crypto traders to move funds between tokens. Their use has grown rapidly in recent years, and proponents say they could be used to send payments instantly.

"The Genius Act will go down in history as a law that served as a foundational step in mainstreaming of crypto as an asset class," said Chris Perkins, president, CoinFund.

Corporate treasury allocations to bitcoin are also gaining pace, with a growing number of public companies adding the token to their balance sheets as a long-term store of value.

The sector was last trading at a combined market value of $3.92 trillion, as bitcoin — the world's largest cryptocurrency — fell 1.8%.

Bitcoin crossed the $120,000 mark earlier this week, setting a record. Brokerage Bernstein forecast it could climb to $200,000 by end-2025.

Ether, the second-biggest crypto token, was last up 4.5%. It has more than doubled over the past three months.

The crypto rally also powered gains in linked equities, with Coinbase and Robinhood climbing to all-time highs on Friday.

Shares of the crypto exchange were last up 1%, while the retail trading platform, which also supports crypto trades, gained 3%.

Source: Reuters

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Manuel

Commodity

Political

JPMorgan’s latest research indicates that international regulators are more inclined to support tokenized deposits, particularly those that preserve the existing structure and stability of fiat-based banking systems, The Block reported on July 18.

According to the Wall Street lender, financial regulators outside the United States are showing a growing preference for tokenized bank deposits over stablecoins.

The trend highlights a shift in how traditional finance seeks to adapt digital technologies without compromising core regulatory and systemic safeguards.

The research, led by JPMorgan’s Nikolaos Panigirtzoglou, highlights how central banks and regulators, including the Bank of England, are leaning toward digital instruments issued by commercial banks that remain fully integrated within the existing financial system.

These tokenized deposits operate on blockchain infrastructure while maintaining the foundational protections of traditional deposits, such as access to central bank liquidity, capital buffers, and compliance with anti-money laundering rules.

Stability and control concerns

The version of tokenized deposits attracting the most regulatory support is the non-transferable kind, also known as non-bearer deposits, which are settled between accounts at full face value.

These instruments minimize the risk of price deviation and preserve uniformity across forms of money, a concept often referred to as the “singleness of money.”

In contrast, stablecoins and transferable (bearer-style) digital deposits can be subject to fluctuations in market value due to credit concerns or liquidity mismatches. Additionally, past market failures have raised red flags about the potential volatility of privately issued digital currencies.

While stablecoins remain more widely used in crypto markets due to their ease of transfer and broad liquidity, JPMorgan’s report noted that such assets often keep their backing within the traditional banking system by investing in instruments like short-term government debt.

As such, they do not represent a true exit from the regulated financial framework.

Diverging paths

In regions like the UK, regulators have questioned the viability of allowing commercial banks to issue stablecoins, especially under frameworks that might require them to hold central bank reserves without generating yield.

JPMorgan’s analysis suggested that such conditions would reduce incentives for banks to issue their own stablecoins.

Meanwhile, U.S. policymakers are taking a different stance. The expected passage of the GENIUS Act, a legislative effort led by President Donald Trump, would allow banks to issue stablecoins directly and promote their use in domestic payments.

This signals a more open approach to integrating stablecoins within the broader financial ecosystem.

JPMorgan itself is exploring tokenized solutions through JPMD, a permissioned deposit coin currently being piloted on Base. The lender is also testing the waters with stablecoins behind closed doors.

The bank filed a trademark for the deposit token product in June, pointing to potential applications in settlement, programmable finance, and cross-bank transfers.

Source: Cryptoslate

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Manuel

Commodity

Political

U.S. energy firms this week added oil and natural gas rigs for the first time in 12 weeks, energy services firm Baker Hughes (BKR) said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, rose by seven, its biggest weekly increase since December, to 544 in the week to July 18.

Despite this week's rig increase, Baker Hughes said the total count was still down 42 rigs, or 7% below this time last year.

Baker Hughes said oil rigs fell by two to 422 this week, their lowest since September 2021, while gas rigs rose by nine, the biggest weekly increase since July 2023, to 117, their most since March 2024.

In Texas, the biggest oil and gas-producing state, the rig count fell by two to 253, the lowest since October 2021.

In the Permian basin in West Texas and eastern New Mexico, the biggest U.S. oil-producing shale formation, the rig count fell by two to 263, also the lowest since October 2021.

But in the Haynesville shale in Arkansas, Louisiana and Texas, one of the nation's biggest and fastest-growing gas-producing regions, the rig count rose by three to 41, the most since March 2024.

The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on boosting shareholder returns and paying down debt rather than increasing output.

The independent exploration and production (E&P) companies tracked by U.S. financial services firm TD Cowen said they planned to cut capital expenditures by around 3% in 2025 from levels seen in 2024.

That compares with roughly flat year-over-year spending in 2024, and increases of 27% in 2023, 40% in 2022 and 4% in 2021.

Even though analysts forecast U.S. spot crude prices would decline for a third year in a row in 2025, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.4 million bpd in 2025.

On the gas side, the EIA projected a 68% increase in spot gas prices in 2025 would prompt producers to boost drilling activity this year after a 14% price drop in 2024 caused several energy firms to cut output for the first time since the COVID-19 pandemic reduced demand for the fuel in 2020. [NGAS/POLL]

The EIA projected gas output would rise to 105.9 billion cubic feet per day (bcfd) in 2025, up from 103.2 bcfd in 2024 and a record 103.6 bcfd in 2023.

Source: Reuters

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Adam

Economic

The line between arbitrage and market manipulation has long been one of the grayest areas in financial markets — and India’s recent action against high-frequency trading giant Jane Street has brought this murky boundary into sharp focus.

Jane Street disputed the findings from India’s regulator, claiming that its actions were “basic index arbitrage trading.”

Arbitrage, at its core, is like spotting a mismatch and trying to make a profit out of it — and it is perfectly legal. It refers to the simultaneous buying and selling of an asset in different markets to exploit price differences.

Market manipulation, by contrast, is an illegal act designed to deceive or distort the free and fair operation of markets — typically by influencing prices or misleading appearances of supply and demand for unfair advantage.

But when does arbitrage edge into illegality?

According to experts whom CNBC spoke to, the distinction hinges on intent and market impact.

On July 3, India’s Securities and Exchange Board (SEBI) temporarily blocked Jane Street Group from participating in the country’s securities markets, accusing the U.S. high-frequency trading firm of large-scale market manipulation. This includes tactics to manipulate India’s Nifty 50 index in order to profit from sizable positions in index options.

According to SEBI’s 105-page interim order, the firm allegedly bought large volumes of stocks and futures tied to the Nifty Bank Index, which tracks the performance of India’s banking sector, during the early hours of trading. It then placed significant wagers anticipating a decline in the index later in the session.

SEBI added that Jane Street subsequently sold off those earlier purchases, pushing the index lower and increasing the profitability of its options positions. The regulator argued that this was part of a “deliberate strategy to manipulate indices” for the benefit of its larger and more lucrative options bets.

SEBI said that the intensity and sheer scale of the intervention, coupled with the rapid unwinding of positions “without any plausible economic rationale,” was deemed manipulative.

Jane Street informed employees in an internal email that it planned to challenge the ban and would later deposit $567 million into an escrow account on July 14, as directed by SEBI, not before requesting permission to resume trading in the country and the lifting of restrictions.

The key: mens rea

As the legal back-and-forth commences, industry veterans said the difference between legal arbitrage and illegal manipulation isn’t always clear-cut.

The intention behind wrongdoing in trades — known as mens rea, which means “guilty mind” in Latin — is key to determining manipulation, said Pradeep Yadav, finance professor at the University of Oklahoma. He also pointed out that creating an arbitrage opportunity by influencing prices in a less liquid market is what crosses the line into illegality.

“Arbitrage turns into market manipulation when you are creating the arbitrage by manipulating the less liquid side of the market,” he said, explaining that the options market in India is very liquid thanks to the large volume of buyers and sellers. However, the country’s spot and futures markets are less so, which renders it easier to push prices by placing large enough trades.

SEBI’s case hinges on two claims. First, Jane Street intentionally distorted the less liquid cash market to profit on the more liquid options market. Indeed, SEBI, in its interim order against Jane Street, cited an earlier judgement from a case, “Nobody intentionally trades for loss. An intentional trading for loss per se, is not a genuine dealing in securities.”

Second, that its profits came entirely from options, with consistent losses in stocks and futures, suggesting the trades were designed to move prices rather than reflect genuine market views.

“Mens rea is the demonstration of ill intent to manipulate the market… if prices are already misaligned, arbitraging them is fine. But if you’re the one pushing prices out of alignment — especially in less liquid markets — to profit on the other side, then that’s manipulation,” said the professor, who added that in a normal arbitrage situation, the size of one’s stock trade and their options trade would be proportional. The imbalance, in his view, suggested it was not a case of classic arbitrage.

Other experts also emphasized that the fine line between market manipulation and arbitrage lies in intent.

However, V Raghunathan, a former SEBI primary market board member, believes that Jane Street’s actions were within the legal realm. Jane Street thrives in exploiting minute inefficiencies — for example, in ETF pricing versus underlying securities, or between exchanges, he said.

“This kind of arbitrage, while aggressive, is legal and often beneficial to market efficiency,” he told CNBC.

He cited the example of latency arbitrage — where firms profit from tiny time delays in market data across venues — as being criticized as parasitic or predatory, but hardly illegal.

That said, Raghunathan noted that the broader concern is whether Jane Street’s strategies came close to manipulation — in either intent or the letter of the law.

Like other experts whom CNBC spoke to, Raghunathan established market manipulation as deliberately misleading or influencing prices and trading volumes to create artificial trends or unfair advantages, such as pump-and-dump schemes and wash trading.

“In short, unless Jane Street is found to be placing deceptive orders, like spoofing, abusing confidential information, or manipulating prices to create artificial moves — none of which it has been accused of — it would not be considered to have engaged in market manipulation,” he said.

Paul Rowady, director of research at Alphacution Research, said that the lines between manipulation and arbitration also depend on the regulator’s teeth. In the U.S., similar allegations would hinge on whether a firm engaged in spoofing or deception.

“Trading aggressively is not a crime,” he said.

Market watchers also echoed that the Jane Street case spotlights the vulnerabilities of India’s market structure — including liquidity imbalances between spot and options markets — which sophisticated players can legally exploit but which regulators may now seek to tighten.

According to SEBI, a recent study of 9.6 million individual equity derivative traders revealed that 91% lost money last year.

As a former U.S. SEC litigator, Howard Fischer puts it, arbitrage is akin to “looking at one’s neighbor’s house, seeing he keeps stacks of newspapers and lit candles everywhere, and taking out fire insurance on his home.”

“Manipulation is giving him a July 4th present of firecrackers and propane tanks,” Fischer, who is now a partner at law firm Moses & Singer, said.

The distinction lies in intent: arbitrage exploits inefficiencies; manipulation tries to manufacture them.

Source: cnbc

To stay updated on all economic events of today, please check out our Economic calendar

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Devin

Economic

President Trump is reportedly pushing for higher blanket tariffs on imports from the European Union, throwing a wrench in negotiations ahead of an Aug. 1 deadline for sweeping duties to take effect.

The Financial Times reported that Trump wants a minimum of a 15% to 20% tariff on EU goods as part of any deal. Trump has threatened the bloc with 30% duties beginning Aug. 1. That is the date he is also set to impose tariffs on an array of other trading partners, as well as potential levies on copper, pharmaceuticals, and semiconductors.

The EU has left the latest discussions disappointed, according to the report, and considering options in negotiations and in potential retaliation.

"We don’t want a trade war, but we don’t know if the US will leave us a choice," the report quoted a senior EU diplomat as saying.

Earlier this week, Trump said he would soon send letters to over 150 smaller US trade partners, setting blanket tariff rates for that large group.

Trump has already sent letters to over 20 trade partners outlining tariffs on goods imported from their countries. The letters set new baseline tariff levels at 20% to 40% — except for a 50% levy on goods from Brazil in a move that waded into the country's domestic politics.

Last week, Trump announced a 35% tariff on Canadian goods and followed that up with promises of 30% duties on Mexico and the EU. The letters have at times upended months of careful negotiations, with Trump saying he is both open to reaching different deals but also touting his letters as "the deals" themselves.

As markets focus on US talks, here is where things stand with other key partners:

Vietnam: Trump said a deal with Vietnam is "pretty well set." Two weeks ago, Trump said the pact would see the country's imports face a 20% tariff — lower than the 46% Trump threatened in April. In addition, there's a higher 40% tariff "on any transshipping" — when goods shipped from Vietnam originate elsewhere, like China.
India: Trump's tariffs on Brazil have raised the stakes for India, another member of the BRICS coalition. Bloomberg reported that the countries are working toward a framework deal that could see US tariffs on goods from India drop below 20%.