Just now! The Fed’s Beige Book has been released—behind a backdrop of moderate economic growth, there are hidden threats. Will the crypto market turn tonight?

Friends, hold tight. I just got the latest Federal Reserve “Beige Book”—you know, the one where the 12 regional Federal Reserve banks across the U.S. collect business intelligence one by one and then compile it into an economic “health check” report. This report covers up to July 6, and it was led by the Chicago Fed.

The core takeaway is one sentence: from late May to June, U.S. economic activity improved from slight to moderate. Of the 12 districts, 11 are growing, with growth a bit faster than last month, while San Francisco is unchanged. Last month was 10 districts expanding, 1 district flat, and 1 district declining. Okay, doesn’t seem that bad? But digging deeper is where it gets interesting.

On prices, 9 districts reported moderate increases, 2 reported strong rises, and 1 reported a slight uptick. The rate of price increases across all regions is either steady or slowing. What’s interesting is that business contacts blame rising costs on both ends—one is the conflict in the Middle East, and the other is tariffs. Consumers are becoming increasingly sensitive to prices and have already started “voting with their feet.”

Inflation is widely split in outlook. Some districts expect inflation to stay where it is, while others think it will cool because fuel prices have fallen. Inside the Fed, there’s also infighting: Waller and Williams have recently sounded more dovish, but several other officials warned that rates may still need to be raised this year. The Middle East situation is like an unpredictable bomb, and oil prices can jump at any moment. Look—at the end of June, the U.S. and Iran reached a temporary peace agreement. Oil prices dipped right after. But once hostilities resumed, oil prices surged again. Multiple contacts say uncertainty around fuel cost prospects is rising.

Is the labor market steady? Mostly steady, but with changes. Five districts saw employment increase slightly, and seven districts were nearly unchanged. Compared with last month—when only one district increased—this is somewhat better. But it’s very hard to find skilled workers and technicians. Manufacturing, construction, and retail are all competing for talent. Wage growth isn’t surging strongly, but in two districts wages jumped sharply due to battles for skilled workers.

Zooming in on the stories by district: In Boston, manufacturing firms are hiring. Retail and hospitality say summer hiring this year will be higher than last year, but one company laid off some white-collar staff because of improved AI efficiency. In New York, driven by World Cup tourists, hotel occupancy rates and room prices rose, restaurants and bars are selling like crazy, and even previously weak international flights have rebounded. In Philadelphia, data centers, AI, and defense manufacturing activity remain strong. In Cleveland, developers say demand for entry-level housing is picking up, while higher-end homes still aren’t struggling to sell. In Richmond, port trade returned to moderate growth after slowing across a few cycles. An Atlanta trucking brokerage says the excess capacity built up during the pandemic is gradually being absorbed, and transport volumes surpassed the same period last year for the first time since 2021. In Chicago, retailers launched stronger promotions because Amazon Prime Day was moved earlier into June, boosting consumption. Interviewees in St. Louis expect businesses will continue to pass costs on to consumers.

But Minneapolis has it rough—rising gasoline prices are suppressing consumption. Consumers are shifting from cash and debit cards to credit cards, and credit card fees are squeezing small business profits. Employers in Kansas City say they’re willing to train job seekers who lack technical skills, but people who don’t have “soft skills” like communication and collaboration don’t even dare to hire. A Dallas staffing firm said hiring demand is increasing across industries and skill levels. One person said June was the best month since before the pandemic. In San Francisco, price-sensitive consumers have started buying cheaper substitutes. In Southern California, one owner said customers are buying fewer expensive foods, and they’re also buying fewer total items.

Put these points together and you should see a picture in your mind: the economy is crawling upward slowly, but internal divergence is severe; inflation expectations haven’t disappeared; and the labor market is tight but not hot. What does that mean for crypto markets? Rate-cut expectations will be repriced. If the Fed stays hawkish because economic growth is only moderate and inflation is sticky, liquidity support for risk assets—including $BTC and $ETH —would be delayed. In the short term, this Beige Book leans neutral-to-bearish: the economy hasn’t broken down, so there’s no need for emergency easing; inflation hasn’t fully come down, so an immediate pivot isn’t possible. Big capital will be more cautious.

My advice to you: don’t fight the data. Watch the late-July FOMC meeting. During this period, $BTC and $ETH will likely churn in a range. Meaningful directional breakouts will need clearer signals—either inflation data suddenly turns cooler, or cracks appear in the labor market. Until then, don’t carry too heavy a position—defense matters more than offense.

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