Stagflation Risks Pressurize Stocks and Cryptocurrencies Amid US Economic Weakness

Based on the latest macroeconomic data as of August 5, 2025, I see a clear and pragmatic outlook for the stock and crypto markets. The US equities, including the S&P 500 and Nasdaq, are entering a risk zone. The labor market is slowing down, evidenced by significantly lower-than-expected NFP figures and rising unemployment. Meanwhile, the manufacturing sector is contracting, but inflation in the services sector is accelerating, with the ISM price index at 69.9. This indicates "bad inflation" amid weak economic growth, potentially leading to a correction in equities, especially if investors start to revise their expectations for near-term rate cuts. The Fed finds itself in a tough spot: stimulating risks fueling inflation, while tightening could jeopardize the economy. In the cryptocurrency space, Bitcoin and altcoins show uncertainty leaning bearish. Weak NFP and rising unemployment serve as dovish signals in a vacuum, but the sharp growth in service prices challenges the Fed's ability to pursue easy monetary policy, which is negative for risk assets. Inflation driven by tariffs, as stated by Powell, presents a more persistent pressure. Bitcoin remains stable but could decline if the dollar index bounces on a hawkish Fed outlook. Trading volumes are low, with altcoins under pressure, especially without strong fundamental drivers. The likely scenario is Bitcoin moving sideways or gradually dropping, while altcoins weaken further, especially with institutional hesitation due to lingering inflation concerns. Regarding bonds and the DXY dollar index, yields could resume rising. The labor market's continued weakness combined with persistent inflationary pressures undermines the prospects for a dovish Fed. The market might overestimate rate cuts, causing yields on US 10-year bonds to climb and the dollar to strengthen. This scenario would exert downward pressure on gold, cryptocurrencies, and equities, increasing demand for the dollar as a safe haven. Overall, the main theme is stagflation: a weakening labor market coupled with accelerating inflation, particularly in services. This creates a challenging environment where neither growth nor rate cuts are feasible—either leading to a prolonged pause or a potential tightening stance from the Fed, which would further pressurize risk assets and precious metals.