The U.S. stock market surged on Tuesday, July 2, as Federal Reserve Chair Jerome Powell delivered a notably dovish message during a monetary policy conference in Portugal. Major indices closed higher, with the S&P 500 marking its 32nd record close of the year and Tesla shares soaring over 10%. The Dow Jones Industrial Average rose 0.41%, while the Nasdaq Composite gained 0.84%, hitting a fresh high.
Despite the positive momentum in traditional markets, Bitcoin (BTC) and Ethereum (ETH) failed to follow suit, showing signs of weakness amid ongoing macroeconomic uncertainty and regulatory delays.
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Powell’s Dovish Remarks Counter Strong Labor Data
In a speech covered by CNBC, Powell expressed confidence in the progress made against inflation over the past year, stating that the U.S. economy is moving back toward disinflation. However, he emphasized caution, noting that the Fed needs "greater confidence" before initiating any interest rate cuts.
This measured, dovish tone helped soothe investor concerns—even in the face of stronger-than-expected labor market data. According to the latest JOLTS report, job openings in the U.S. increased by 221,000 in May, reaching 8.14 million, surpassing economists’ expectations of 7.91 million. The data suggests continued labor demand despite earlier declines in job openings over the prior two months.
Powell’s comments signaled that while economic fundamentals remain solid, the central bank is prioritizing price stability and may hold rates steady longer than previously anticipated. This delicate balance between growth and inflation control has become a key driver of market sentiment in 2025.
Bitcoin and Ethereum Show Limited Momentum
While equities rallied, the crypto market remained subdued. Bitcoin briefly broke above $63,000 but quickly retreated, failing to sustain upward momentum. Similarly, Ethereum continued its downward trend over the 24-hour period, reflecting broader investor hesitation.
One major factor weighing on Bitcoin’s performance is continued selling pressure from government-held reserves. On-chain data from Arkham Intelligence reveals that Germany’s Federal Criminal Police Office (Bundeskriminalamt, or BKA) transferred significant amounts of BTC to major exchanges including Coinbase, Bitstamp, and Kraken. Between June 29 and July 2, Germany’s BTC holdings dropped from 50,000 to 43,549—representing a sale of 6,451 bitcoins worth approximately $400 million at current prices.
Such government liquidations often trigger short-term bearish sentiment, as they increase supply on exchanges and raise concerns about potential downward price pressure.
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Meanwhile, Ethereum’s prospects were dampened by regulatory developments. The U.S. Securities and Exchange Commission (SEC) last Friday returned S-1 registration forms to several would-be Ethereum spot ETF issuers, requesting revisions before resubmission by July 8. This delay pushes back expectations for a near-term approval of spot Ethereum ETFs—a key catalyst many investors had been anticipating.
The setback echoes earlier challenges faced by Bitcoin ETF applicants but underscores the SEC’s cautious stance on crypto-based financial products. Without clear regulatory green lights, institutional inflows into Ethereum may remain limited in the short term.
What Investors Should Watch Next
Market attention now turns to upcoming macroeconomic data releases. Today, investors will analyze the minutes from the latest Federal Open Market Committee (FOMC) meeting for further clues on the Fed’s rate trajectory. With Thursday being Independence Day in the U.S., markets will close early, potentially leading to thinner trading volumes and heightened volatility.
The week culminates with the release of the non-farm payrolls (NFP) report on Friday—an influential indicator closely watched for insights into labor market health and future monetary policy decisions.
Strong employment numbers could reinforce the Fed’s patient approach to rate cuts, supporting equity markets while potentially pressuring risk assets like cryptocurrencies. Conversely, a softer-than-expected report might revive hopes for earlier rate reductions, possibly boosting investor appetite for higher-risk digital assets.
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Frequently Asked Questions (FAQ)
Q: Why did stocks rise while Bitcoin fell despite Powell’s dovish comments?
A: While dovish signals generally support risk assets, Bitcoin often reacts differently due to unique factors like exchange inflows from government sales or regulatory uncertainty—both of which were present this week.
Q: How do government Bitcoin sales affect the market?
A: When governments sell seized BTC through exchanges, it increases available supply and can create downward price pressure, especially if buyers don’t absorb the volume quickly.
Q: What does the SEC’s rejection of Ethereum ETF filings mean?
A: It means issuers must revise their applications—likely addressing classification, custody, or market manipulation concerns. Approval is delayed but not ruled out; resubmissions due July 8 could set the stage for future decisions.
Q: Will a strong jobs report hurt cryptocurrency prices?
A: Possibly. Strong data may reduce expectations for rate cuts, strengthening the U.S. dollar and making non-yielding assets like crypto less attractive in comparison.
Q: Is the S&P 500’s record run sustainable?
A: Sustainability depends on earnings growth, inflation trends, and interest rate policy. Current momentum is supported by tech earnings and easing inflation—but external shocks could shift sentiment.
Q: What should traders watch this week?
A: Key events include the FOMC minutes (today), early market close on Thursday (U.S. holiday), and Friday’s non-farm payrolls report—all of which can influence both stock and crypto markets.
As we move deeper into 2025, the interplay between monetary policy, regulatory developments, and macroeconomic data will continue shaping investment flows across asset classes. While equities enjoy strong tailwinds, digital assets remain in a transitional phase—awaiting clearer signals from both regulators and market participants.