Blockware Intelligence Newsletter: Week 220
Bitcoin on-chain analysis, mining analysis, macro analysis; overview of 8/10/26 - 8/14/26
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July inflation data dropped this week; CPI came in at 3.4% & Core CPI came in at 2.5%. This is the second consecutive month of disinflation, following a 3-year high in May of ~4.16%.
Due to rising CPI levels in Q1 & Q2, the market began aggressively pricing in rate hikes for 2026 (despite no indication from Kevin Warsh that hikes are in the playbook). At the peak, the market was pricing a 93% chance of a rate hike in 2026, but those expectations are unwinding further after the latest CPI print; with the odds now down to 66%.
Energy prices (up 14% year-over-year) continue to be the primary driving force behind the higher relative inflation in 2026. As we’ve mentioned in previous newsletters, the war in Iran, although a negative catalyst for markets, appears to be fully priced in at this point.
If/when this conflict unwinds, energy prices will drop, geopolitical uncertainty will subside, and BTC will likely move higher in short order.
The higher energy prices are creating more pressure on the average consumer. US Retail Sales for July came in at negative 0.6%; well below expectations of 0.1%. A slowdown in consumer spending is another data point working against the expected interest rate hikes.
Furthermore, the July jobs report from the BLS reported a 23,000 decline in non-farm payroll employment; below expectations here as well and the 4th consecutive declining month.
For a Fed purportedly committed to being data-driven, the data is not inducive towards a rate hike.
Data supporting a rate hike:
Higher energy prices
Data supporting a rate cut (or pause):
CPI Disinflation
Core CPI Disinflation
Declining Consumer Sales
Declining Nonfarm Payroll
Rate hikes being priced out of the market could be the demand catalyst that provides life to BTC.
Thankfully, Bitcoin doesn’t need a “demand catalyst” to move higher. Price is set based on marginal changes in supply and demand; and supply continues to constrain.
Long-term holder supply sits near all-time highs as convicted Bitcoiners have spent much of this year stacking and accumulating. The metric is slightly skewed at the moment due to ~200,000 BTC being moved in the 7 days following the coldcard hack. However, given the unique circumstances of this coin movement, it would be irrational to consider these coins as a large potential source of sell pressure.
Coin Days Destroyed provides confirmation that this movement was a one-time event (long-term holders adjusting their custody setup) rather than a continuous influx of supply into the market.
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