Risk-Off Sweeps Global Markets as Bitcoin Slides; Vanguard Opens Crypto ETF Access to Millions Ahead of Key US Inflation Test
Equities faltered and FX volatility ticked higher as risk appetite cooled, with Bitcoin’s sharp drop rippling through tech and crypto-linked shares. Vanguard’s decision to open trading in regulated crypto ETFs to its vast client base stood out against the backdrop of rising US yields and an approaching core PCE inflation read that could set the tone for the dollar and rates.
Key developments traders are watching
- Vanguard enables trading of regulated crypto ETFs for roughly 50 million clients, expanding mainstream access.
- Spot Bitcoin ETFs reach about $120 billion AUM; Ethereum ETFs near $20 billion, underscoring institutional demand.
- US stock indices slipped as Treasury yields climbed; risk-off hit Big Tech and crypto-related equities.
- Bitcoin fell 5–10% intraday, underscoring sensitivity to yields and liquidity conditions.
- Energy shares outperformed as oil prices advanced, complicating the near-term inflation picture.
- US manufacturing has contracted for nine straight months amid tariff pressures and slower hiring.
- Ahead of the Fed’s preferred inflation gauge, core PCE, FX markets priced a firmer dollar and higher rate path risk.
- AI bellwethers remain in focus: Nvidia’s valuation seen as historically attractive by some; BofA flags upside in AMD and Broadcom.
- Alphabet hit fresh highs on the Gemini 3 AI launch; cloud backlog reportedly around $155 billion, buoying sentiment.
- AMD is up roughly 82% YTD but slipped after reports of Meta weighing Google TPUs; BofA still sees a $1.2T AI chip TAM.
Market recap: yields up, stocks down, crypto wobbles
US benchmarks broke recent winning streaks as Treasury yields pushed higher, pressuring duration-sensitive tech and speculative assets. Crypto-tied shares and growth leaders led declines, mirroring a 5–10% slide in Bitcoin that underscored the asset’s correlation to real yields and broader liquidity. The dollar firmed in FX trade, reflecting defensive positioning into the data calendar and a reassessment of policy easing timelines.
Vanguard broadens access to crypto ETFs
Vanguard’s move to open trading of regulated crypto ETFs to its large retail base could deepen liquidity and normalize crypto within traditional portfolios. With spot Bitcoin funds now near $120 billion in assets and Ethereum ETFs around $20 billion, mainstream access is expanding even as price action remains volatile. For portfolio constructors, regulated vehicles offer operational simplicity and custody clarity compared with direct token exposure.
Macro pulse: manufacturing drag meets tariff pressure
US factories remain in contraction for a ninth consecutive month, as tariffs weigh on sales while hiring cools. The industrial downswing contrasts with resilient services, keeping recession odds debated but not definitive. For FX and rates, the manufacturing slump complicates the inflation-growth mix, especially if higher energy costs persist.
FX: dollar support builds on yields, risk tone
The risk-off turn and firmer Treasury yields underpinned the US dollar across major pairs, while high-beta and commodity FX lagged despite the lift in oil. The yen’s safe-haven appeal was tempered by rate differentials, leaving USD/JPY sensitive to front-end yield swings. Implied volatility edged higher as traders positioned around the upcoming PCE release.
AI and megacap tech remain pivotal
Even amid a pullback, AI leaders continue to shape index performance. Nvidia’s valuation is viewed by some as attractive relative to growth prospects, while BofA sees scope for AMD and Broadcom to execute despite intensifying competition. Alphabet notched new highs following the Gemini 3 AI rollout, supported by a deep cloud backlog near $155 billion. AMD, up about 82% year-to-date, eased after reports that Meta is evaluating Google TPUs—yet BofA argues the $1.2 trillion AI chip opportunity is large enough for multiple winners.
Energy bid complicates inflation outlook
Oil’s advance propped up energy stocks and revived concerns about sticky inflation. A sustained move higher in crude could keep headline readings firm and feed through to core components, keeping the Fed cautious and the dollar underpinned in the near term.
What’s next
All eyes turn to core PCE—the Fed’s preferred inflation gauge—for confirmation of disinflation’s durability. A hotter print risks lifting yields and the dollar, while a cooler outcome could revive risk appetite. Traders will also watch crypto ETF flows post-Vanguard’s access shift, manufacturing data for signs of a bottom, and AI capex updates from megacaps.
FAQ
How could the core PCE report affect the dollar and yields?
A hotter PCE reading would likely push Treasury yields and the US dollar higher as markets price fewer or later Fed cuts. A cooler print could ease yields, pressure the dollar, and support risk assets.
What does Vanguard’s opening of crypto ETF trading mean for markets?
It expands mainstream access for millions of investors to regulated crypto exposure, potentially deepening liquidity and stabilizing flows. However, prices can still be volatile around macro events and yield shifts.
Why did Bitcoin fall even as ETF assets reached new milestones?
ETF AUM growth reflects structural demand, but short-term pricing remains sensitive to real yields, risk sentiment, and liquidity. Profit-taking and broader tech weakness can amplify downside moves.
How are AI chip stocks influencing broader indices?
Megacap AI names carry heavy index weights, so their swings drive headline indices. While competition is rising, some analysts argue the total addressable market—estimated around $1.2 trillion—is big enough for multiple winners.
What should traders watch in US manufacturing data?
New orders, employment, and price components. A turn in new orders could signal a bottoming process; persistent tariff-related pressures and weak hiring would argue for a slower recovery.
Reporting by BPayNews.
