Best-Performing ETFs of Last Week: Crypto & Blockchain Rule

Despite downbeat economic data, including declining consumer sentiment, rising annual inflation to 2.9% in August 2025, and weaker job growth of 22,000, Wall Street indices advanced last week, with the S&P 500 gaining 1.6% and Nasdaq Composite surging 2%. This market resilience was primarily driven by increasing expectations for a Fed rate cut (93.4% chance of 25bps), strong corporate fundamentals, a robust IPO market, and sustained AI-driven tech momentum, while crypto and blockchain-related ETFs significantly outperformed, fueled by strong gains in major digital assets like Solana, Bitcoin, and Ethereum.

Analysis

U.S. equity markets demonstrated notable resilience last week, with the S&P 500 gaining 1.6% and the Nasdaq Composite surging 2.0%, despite a backdrop of deteriorating macroeconomic data. Key economic indicators were decidedly negative: the University of Michigan's consumer sentiment index fell to a low of 55.4, August's annual inflation rate accelerated to 2.9%, and the economy added only 22,000 jobs, significantly missing the 75,000 forecast. This market strength appears primarily driven by a 'bad news is good news' interpretation, as the weak data solidified market expectations for a near-term Federal Reserve rate cut, with CME FedWatch Tool data indicating a 93.4% probability of a 25-basis-point reduction. Supporting this upward momentum was a robust IPO market, which had its strongest week since November 2021, and continued enthusiasm for the AI-driven tech sector. However, the most pronounced gains were in the digital asset space, where crypto and blockchain ETFs dramatically outperformed. For instance, the CoinShares Bitcoin Mining ETF (WGMI) rallied 26.7% and the Solana ETF (SOLZ) gained 17.6%, fueled by underlying asset price increases in Solana (+13.3%) and Bitcoin (+4.5%), indicating a strong, speculative risk-on appetite in specific market segments that is currently decoupled from broader economic headwinds.

Key Decisions for Investors

• Given the market's rally is heavily dependent on monetary easing, investors should closely monitor upcoming Federal Reserve commentary, as any deviation from the expected 25-basis-point rate cut could trigger a significant market repricing.
• The significant outperformance of speculative assets, such as crypto ETFs like WGMI and BKCH which surged over 20%, suggests a high-risk, high-reward environment; it may be prudent to manage position sizes in these volatile sectors while recognizing their current disconnection from weakening economic fundamentals.
• The divergence between weak macroeconomic data (jobs, inflation, sentiment) and strong equity performance highlights a fragile rally; investors should consider if their portfolio is overly exposed to rate-sensitive growth sectors and monitor the revitalized IPO market as a key barometer of sustained risk appetite.