Dovish Jobs Print Improves the Near-Term Setup
Today’s jobs report was clearly dovish. The U.S. economy lost 23K jobs in July, prior months were revised materially lower, and wage growth slowed to 3.2% YoY. The unemployment rate declined, but that came alongside another drop in labor force participation, suggesting some of the apparent resilience in the labor market continues to reflect constrained labor supply rather than especially strong demand.
Rates responded accordingly, with yields moving lower across the curve and some tightening being priced out. That is constructive for crypto as rising real yields have been a meaningful headwind. CPI next week remains the next major test, but for now this supports my tactically optimistic view on the broader complex.
Clarity Is Not Happening Before Recess
It appears that Clarity will not receive a Senate vote before the August recess, and there still seems to be meaningful work remaining around ethics and potentially stablecoin yield before the Senate reconvenes in September.
The good news, from a markets perspective, is that most, if not all, of the downside of a “no Clarity” scenario is already reflected in prices. That leaves some attractive asymmetry. Clarity no longer needs to pass for crypto to trade higher, while any unexpected progress after recess would create meaningful right-tail risk.
Cloudflare Could Unlock a New Source of Stablecoin Growth
The most interesting earnings call of the past few weeks was not from a crypto-native company. It was Cloudflare (NET), which posted strong results on Thursday and continues to highlight AI as an increasingly important tailwind for its business. Perhaps more interesting for crypto, Cloudflare recently noted that more than 50% of Internet traffic is now non-human, reflecting the rapid growth of bots, crawlers, and AI agents accessing data, APIs, and internet services. As reflected by recent product announcements, Cloudflare is now focused on building the payments layer that could allow more of that machine activity to transact autonomously as the web evolves from an ad/subscription-based model toward a more usage-based one.
- Its Monetization Gateway will let vendors charge agents for usage-based access to APIs, data, content, and other services, while its agent tooling gives agents the ability to autonomously pay for resources.
- The Monetization Gateway is launching with stablecoin settlement through x402. In effect, Cloudflare is helping build both sides of a machine-native marketplace.
- I think this matters because agentic commerce still faces a chicken-and-egg problem. There are too few services capable of accepting agent payments and too few funded agents capable of making them.
- Cloudflare may be unusually well positioned to help solve that problem because the machine traffic already exists across the Internet infrastructure it serves. Rather than creating demand from scratch, it can potentially add monetization to activity that is already occurring.
That is also where I think Cloudflare differs from a company like Stripe. Stripe is largely extending agentic capabilities into traditional commerce, while Cloudflare could help enable a new category of granular, machine-native commerce, such as agents paying fractions of a dollar for data, API calls, compute, or content.
The Bigger Read-Through May Be Stablecoins
I am not necessarily a buyer of Cloudflare here given that the valuation already seems to price in a good deal of optimism around the direction of travel for agent-based web traffic. The more interesting implication, in my view, is for stablecoins and on-chain activity.
If Cloudflare is successful in helping solve the cold-start problem for agentic commerce, the number of machine-to-machine transactions could become enormous. Importantly, this could represent a genuinely new source of structural stablecoin demand rather than simply shifting existing payment volumes onto crypto rails.
This is one way the long-term bull case for Circle could eventually become more compelling. I remain skeptical of the current valuation and margin profile, but if x402 volumes begin to inflect and USDC emerges as a dominant settlement asset for agentic payments, it could provide a pathway toward the type of sustained USDC growth required to justify a more optimistic view.
I will be watching this chart for any semblance of growth:
Portfolios
Tickers in this video: USDC 0.00% NET CRCL
______________________________
PS: If you are enjoying our service and its evidence-based approach, please leave us a positive 5-star review on Google reviews —> Click here.