Merkle3s Weekly Recap: Rising Treasury yields continue to pressure risk assets as BTC ETFs post a record $4.06B monthly outflow; USDT surpasses ETH to become the second-largest crypto asset; Morgan Stanley files for ETH/SOL spot ETFs; CLARITY Act clears the Senate Banking Committee — regulatory framework comes into focus 1️⃣ Macro: DXY Hits One-Year High, Treasuries Under Pressure, Inflation Rebounds ➡️ The US Dollar Index (DXY) has climbed to ~101, a one-year high, closing above its 100-week moving average for the first time since February 2025 ➡️ Long-end Treasury yields continue to push higher (10Y approaching 4.5%), as Fed rate-cut expectations narrow (50–70% probability of a hike priced in for year-end). Rising Nikkei 225 volatility and unusual swings in Korean equities signal tightening global liquidity conditions ➡️ Near-term impact: persistent DXY strength creates a classic headwind for BTC and crypto, as capital rotates into dollars and Treasuries — further tightening crypto market liquidity 2️⃣ BTC in Deep Bear Territory: Record ETF Outflows, Fear Index Bottoms Out ➡️ sits at roughly $60,000, down ~52% from its October 2025 ATH (~$126,000). The Fear & Greed Index dropped as low as 12 (Extreme Fear) — the lowest reading of the current cycle ➡️ US spot BTC ETFs recorded approximately $4.06B in net outflows in June, a record monthly high (previous record: $3.56B in February 2025). Seven consecutive weeks of net redemptions, with a single-week peak of ~$1.8B. BlackRock IBIT saw ~$2.1B in outflows, Grayscale GBTC ~$1.2B ➡️ fell to roughly $1,550. Tether $USDT market cap broke through $186B, surpassing ETH (~$185B) for the first time to become the second-largest crypto asset. This marks the first time a stablecoin has overtaken ETH — a reflection of capital consolidating into on-chain dollars during risk-off periods 3️⃣ US Semiconductor: Buy the Rumor, Sell the News — Antitrust Suit Resurfaces ➡️ Micron $MU reported FY26 Q3 earnings on June 24 that massively beat expectations: revenue of $41.46B (vs. ~$35.9B expected), adjusted EPS of $25.11 (vs. ~$20.50), gross margins at ~85%. Q4 guidance was equally strong (revenue ~$50B, EPS ~$31). AI-driven HBM memory demand continues to surge, with 2026 capacity fully sold out and some analysts raising long-term price targets to $1,870–$2,000 ➡️ But it was a classic sell the news — shares spiked 15% after hours, then reversed entirely over the following sessions, at one point plunging ~8% intraday (erasing ~$80B in market cap). Compounding the sell-off: a June 25 antitrust class-action lawsuit alleging the three memory giants restricted consumer DRAM capacity, diverted production to HBM, and artificially inflated prices by ~700% ➡️ The core tension: the AI memory supercycle vs. the AI tax on consumer memory pricing. Elevated semiconductor leverage and crowded retail positioning remain unresolved 4️⃣ Morgan Stanley Files for ETH/SOL Spot ETF — Competition Shifts to Fee Wars ➡️ Morgan Stanley filed S-1 registrations for ETH and SOL spot ETFs on June 23, with an annual fee of just 0.14% — undercutting BlackRock (0.25%) and Bitwise (0.20%). The ETH product returns 95% of staking rewards to investors, with Galaxy Digital serving as custodian ➡️ This signals traditional finance giants now competing for crypto ETF market share via low fees + staking yield strategies. Fidelity, VanEck, 21Shares, and others have filed or updated S-1s with staking components. The ETF race is shifting from "can you buy it?" to "who's cheapest and who pays the most yield" 5️⃣ CLARITY Act Clears Senate Banking Committee — July Is the Make-or-Break Window ➡️ The crypto market structure bill CLARITY Act passed the Senate Banking Committee with a bipartisan 15–9 vote and has been placed on the Senate Legislative Calendar. Senator Lummis is pushing for a floor vote after the Senate reconvenes on July 13, targeting completion before month-end ➡️ Core of the bill: classifies most digital assets as commodities (primarily under CFTC oversight), delivering the regulatory clarity the crypto industry has long awaited. Requires 60 votes to pass; Republicans hold ~53 seats, needing at least 7 Democrats. Galaxy Research has lowered the 2026 passage probability to ~50% ➡️ July is the make-or-break window — missing the pre-August recess deadline would likely push the bill into 2027 6️⃣ Hyperliquid HIP-3: Record $72.15B Monthly Volume, TradFi Share Keeps Growing ➡️ Hyperliquid HIP-3 (TradFi perpetuals) recorded approximately $72.15B in June trading volume, an all-time monthly high. Trade xyz accounts for ~97% of HIP-3 volume. HIP-3 now represents ~33% of total Hyperliquid perp volume, with peaks approaching 49% ➡️ Daily volume surpassed $3B at peak; open interest (OI) hit a record high of ~$3.1B. Priority fees from HIP-3 continue to drive HYPE token burns