July Market Outlook: Variables Hidden in Calmness

The market has entered a period of calm, with trading volume dropping to a 9-month low and volatility reaching a 21-month low. This suggests that despite active dynamics expected in July, the market may face a slowdown in growth during the summer.

Despite the numerous events and news in July, the market may still fall into a state of calm. Based on the past four years of experience, each July has been accompanied by either positive or negative impactful events, yet prices have remained firm, and traders seem to prefer to "enjoy life" rather than monitor the market closely. We hope this year will be different; is this idea merely wishful thinking?

July Outlook: Another Quiet Summer?

A series of important events is about to unfold. Trump's actions continue to influence the market, distorting risk sentiment and driving the price of Bitcoin. July will be overshadowed by Trump's potential impact: the "big and beautiful" budget plan, the end of the tariff suspension period, and the deadline for the latest crypto executive order are all on the agenda this month.

• Budget Proposal: Trump signed the "Big and Beautiful" budget proposal on July 5th, Beijing time. The bill is controversial due to its expansionary nature, potentially increasing the U.S. deficit by $3.3 trillion. An expansionary fiscal budget is favorable for scarce assets like Bitcoin, but this benefit may be overshadowed by renewed discussions on tariffs.

• Tariff Issues: The 90-day tariff exemption period will end on July 9, and it is expected that Trump will make more comments regarding different countries. The impact of the new tariffs will be gradually disclosed and adjusted throughout the month. Reflecting on the experience from February to April, tariff uncertainty can easily suppress market sentiment, which has a negative impact on Bitcoin.

• Crypto Executive Order: The third potential development is the U.S. policy direction related to cryptocurrencies. July 22 is the final deadline for the latest crypto executive order, by which time the task force is required to submit a report recommending legislative and regulatory frameworks, as well as assessing the U.S. digital asset reserves. These reserves were previously affected by an executive order known as "Strategic Bitcoin Reserves." Although all deadlines for this order have passed, information regarding the current amount of Bitcoin held by the U.S. government, future procurement plans, or compensation to victims has not been disclosed. Even if no further information is released after July 22, decisions and announcements regarding the SBR could still emerge at any time.

These events could all affect the BTC trend, depending on which factor dominates: fiscal expansion or trade uncertainty. Additionally, the reduced liquidity due to the July 4th Independence Day holiday in the U.S. may increase recent market uncertainty and make traders reluctant to take risks.

The Evolution of the "Trump Trade" and Market Sentiment

Trump's actions have stirred the market, and this is an indisputable fact. In the six months following his inauguration, global uncertainty has increased, leading to a more sluggish market (especially the crypto market). Based on indicators such as funding rates, open interest, leveraged ETF exposure, trading volume, and options skew, it is hard to imagine that Bitcoin is only 5% away from its all-time high. In the current environment dominated by uncertainty, the market's risk appetite is expressed very mildly through the aforementioned financial instruments, resulting in price and risk tolerance in a completely different structural state compared to past bull market periods.

This suppressed risk appetite can be interpreted as a positive signal for the future of Bitcoin. Limited euphoria means that if the subsequent market conditions improve, the risk of liquidation will be lower. Currently, there is no reason for the market to undergo large-scale deleveraging, and the overall leverage level remains controlled, which is more suitable for continuing to hold spot positions and maintaining patience during this seasonal bear market.

History repeating itself or breaking the norm?

Looking back from 2021 to 2024, July is the second least active month of the year in terms of trading volume, despite July in the past few years being filled with headlines significant enough to shake the market.

• In July 2021, after China banned BTC mining, the price of BTC plummeted to an annual low;
• In July 2022, Three Arrows Capital and Celsius entered bankruptcy proceedings;
• Although 2023 has been relatively calm, BlackRock submitted a BTC ETF application;
• The year 2024 will be particularly tumultuous, with Mt.Gox starting to distribute assets at the beginning of the month, the German government selling off Bitcoin, Trump surviving an assassination attempt and attending the BTC conference in the middle of the month, and Biden withdrawing from the presidential race at the end of the month.

In an environment lacking signs of market overheating, choosing to continue holding spot and maintaining patience may be a more prudent strategy.

In-depth Analysis of Market Data

Spot Market Performance

Trading activity in the spot market has further weakened over the past seven days, with the average daily trading volume (ADV) declining by 34% compared to the previous week. The 7-day average daily trading volume has dropped to $2.18 billion, marking the lowest record since October 15, 2024. This sluggish activity is primarily driven by a narrow consolidation range and a relatively calm news environment.

Bitcoin spot trading volume fell to its lowest level since September 2024 in June 2025, continuing the generally sluggish trading trend of the summer. Historical data shows that from June to October, which only accounts for 43% of the year, it contributes only 32% of the annual trading volume. Historically, July (accounting for 6.1% of annual trading volume) and September (accounting for 6% of annual trading volume) are usually the quietest months of the year.

The volatility has also shown a similar pattern. The 7-day volatility has decreased to 0.79%, the lowest point since October 14, 2023. Notably, in the past year, the longest consecutive duration of such low 7-day volatility (below 1%) was only two days, indicating that more substantial market fluctuations may occur in the short term. Historical data shows that even in the context of events such as the 2021 China mining ban, the 2022 bankruptcy of crypto companies, and significant political events in 2024, the average volatility in July, September, and October remains low.

Despite the weak price trend, the capital flow has shown strong performance. The Bitcoin ETP (Exchange Traded Product) recorded a net inflow of 18,877 BTC over the past week, almost entirely contributed by the massive capital inflow into the US spot ETFs, marking the strongest single-week capital inflow since May 28. However, the strong capital inflow stands in stark contrast to the stagnant prices, indicating significant selling pressure in the market.

Therefore, despite the presence of multiple potential market catalysts in July 2025, the market may still linger in a state of low trading volume and low volatility based on past patterns, entering a typical summer lull.

Derivatives Market

Overall, the low futures premium, limited capital flow in leveraged ETFs, and low leverage and moderate yields in the perpetual contract market indicate that the risk of a leverage-driven market squeeze is limited in the short term.

• Futures: Cryptocurrency futures have performed moderately over the past week, with traders avoiding new directional positions despite the significant June contract expiration. Overall risk exposure remains subdued. The annualized premium for Bitcoin futures has stayed weak, hovering around 7-8%, and slipped to 6.5% during Tuesday morning trading, marking the lowest level in the past 8 days.

• Leveraged ETF: The activity of leveraged ETFs has also been mild, with small outflows of funds occurring continuously since last Thursday, indicating that the market's low risk appetite remains solid. Over the past week, open interest has decreased by 2,105 BTC, primarily because traders held June contracts worth 8,960 BTC until expiration. Over the past two months, when the price of Bitcoin has remained above $100,000, its open interest has fluctuated within a narrow range of 145,000 to 160,000 BTC.

• Perpetual Contracts: The perpetual contract market also reflects the same cautious sentiment. The average annualized funding rate over the past 7 days is only 2.5%, far below the neutral level of 10.95%. This indicates a continued lack of willingness in the market to establish new long positions, resulting in the prices of perpetual contracts remaining below spot prices. The open interest of Bitcoin perpetual contracts is still well below the peak in May, basically stagnating at the level of 266,000 Bitcoins, only slightly rebounding from last week's low of 257,000 Bitcoins.

• Options Market: Meanwhile, in the Bitcoin options market, due to the prolonged price consolidation and reduced trading activity, the demand for directional bets has weakened, and the term structure has trended towards neutrality. At the same time, the long-term consolidation has compressed implied volatility to a new annual low, and the market expects the summer trend to continue to progress slowly.

The rise of the altcoin derivatives market

Over the past year, the relative leverage ratio of the altcoin market has surged dramatically. The proportion of perpetual contract open interest to market capitalization has nearly doubled, increasing from 3% on July 1, 2024, to 5.6% today, indicating that leveraged trading in altcoins is much more active compared to a year ago.

The notional open interest of Ethereum increased by 68%, from 3.5 million ETH to 6.88 million ETH. In contrast, the notional open interest of Solana grew by 115%, from 13.2 million SOL to 28.3 million SOL. In comparison, the open interest of Bitcoin remained relatively stable, changing from 263,000 BTC on July 1, 2024, to 266,000 BTC on July 1, 2025.