Hello readers,

Stablecoin supply is on the rise. ETH is outperforming BTC. Open interest across the altcoin sector is building. And greed is back on the table.

In today’s issue, we’re covering the macro setup as well as a suite of onchain data KPIs for clues as to what comes next.

Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.

The DeFi Report is powered by BIT Digital, the leading global platform for high-performance computing infrastructure and one of the largest ETH treasury companies. NASDAQ: BTBT

Let’s go.

Macro

Global Liquidity

Data: Cross Border Capital

Global liquidity conditions continue to rise, but at a cooling pace (8.8% growth annualized over the last three months, down from 18% in Q2).

The chart above plots the MSCI World Stock Market index against global liquidity, showing the undeniable linkage between the two.

Historically, risk assets respond to global liquidity with a roughly 3-month lag. We can see that via the drop in liquidity in Q4, which translated into a drop in risk assets in Q1. Risk assets then bounced in Q2 after improving liquidity in Q1.

Given that the orange line continues to rise, we do not see any major warning signals in the near future.

Tariffs

President Trump is on a roll. We now have trade deals with the UK, China, Vietnam, Indonesia, the Philippines, and Japan. The announcement of the EU deal added another 27 countries to the list.

The takeaway? Baseline tariff rates were raised from 10% to 15% which could translate into $300-400b/year in tariff duties that should help to reduce the federal deficit in the U.S. Meanwhile, the countries with which deal were made have lowered or removed reciprocal tariffs on goods imported from the U.S.

The Big Beautiful Bill

Business-friendly provisions:

The corporate tax rate stays at 21%. However, per research from Morgan Stanley, the reinstatement of 100% bonus depreciation, immediate R&D and interest deductions, new investment credits, and full expensing of factories could effectively push the corporate tax rate as low as 12%, the lowest rate in U.S. history.

Businesses can now fully deduct (in the year of acquisition) the cost of “qualified property,” rather than depreciating it over time.
Funding for the Consumer Financial Protection Bureau was cut roughly in half, reducing its supervisory authority over financial institutions and consumer protections.

Trump has also stated that the EU agreed to purchase $750 billion worth of U.S. energy and invest an additional $600 billion in the U.S as part of the tariff deals.

It’s all an interesting recipe to attract business to America.

Not to mention our now thriving AI and crypto sectors that are welcoming new business-friendly regulations.

Government Spending

Government spending under the new tax law is projected to push the deficit-to-GDP ratio to more than 7% by 2026, more than double the historical average prior to the 2008 financial crisis.

Of course, the deficit is already up to $1.3 trillion with three months remaining in the fiscal year (ending September 30, 2025). We’ll be looking for tariff revenues to offset this in the coming quarters.

Data: US Treasury

If spending persists, we could see upward pressure on bond yields and interest costs, potentially driving a higher-for-longer interest rate environment.

We’ll know more on this front with the FOMC meeting and Powell press conference this afternoon. Rates are expected to remain unchanged, with the market anticipating more dovish commentary regarding the September meeting and two cuts this year. We’ll hear from Powell again in August at the Jackson Hole annual meeting.

Tomorrow we’ll get PCE inflation and PMI data for June.

And Friday, we’ll get the Unemployment data, ISM data, and the Michigan Consumer Sentiment report.

For now, credit spreads and the VIX remain low. Markets are increasingly positioned for risk-on.

But what is the onchain data telling us about where we are in the crypto cycle?

And how does this impact portfolio management?

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Greed back on the table?

A macro update + look onchain

Topics Covered