July Market Outlook: Uncertainties Hidden in Calmness, "Summer Weakness" or Unexpected Surprises?

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

Despite the intense events and numerous news in July, the market may still remain relatively calm. Based on the experience of the past four years, each July has been accompanied by significant events, but prices often remain stable, and traders seem to prefer to "enjoy life" rather than frequent trading. Whether this year will be different is worth paying attention to.

July Outlook: Another Quiet Summer?

A series of important events are about to unfold. Trump's actions continue to impact the market, distorting risk sentiment and driving the price of Bitcoin. July will be overshadowed by Trump's potential influence: budget proposals, adjustments to tariff policies, and the latest deadlines for crypto-related regulations are all on the agenda this month.

• Budget Bill: Trump signed a new budget bill on July 5th, Beijing time. The bill has been 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 gradually be disclosed and adjusted throughout the month. Looking back at the experiences from February to April, tariff uncertainty can easily suppress market sentiment, which negatively affects Bitcoin.

• Trends in Cryptocurrency Policy: July 22 is the final deadline for the latest cryptocurrency-related policies, by which the working group must submit a report recommending legislative and regulatory frameworks, as well as assessing the United States' digital asset reserves. This reserve has previously been influenced by a policy called "Strategic Bitcoin Reserve." Although all deadlines for this policy have passed, information regarding the current amount of Bitcoin held by the government, future procurement plans, or compensation to victims has not yet been made public. Even if no further information is released after July 22, announcements and decisions related to this matter could emerge at any time.

These events may affect the BTC trend, depending on which factor dominates: fiscal expansion or trade uncertainty. In addition, the reduction in liquidity due to the July 4th Independence Day holiday in the United States may increase recent market uncertainty and make traders more cautious.

The "Trump Effect" in Evolution and Market Sentiment

Trump's actions have stirred the market, which is an undeniable fact. During his first six months in office, global uncertainty has increased, leading to a more sluggish market, especially in the crypto sector. Judging by indicators such as funding rates, open interest, leverage ETF exposure, trading volume, and options skew, it is hard to imagine that Bitcoin is only 5% away from its historical 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 being in a completely different structural state compared to previous bull market periods.

This suppressed risk appetite can be interpreted as a positive signal for the future of Bitcoin. Limited frenzy means that if the market warms up later, the liquidation risk will also 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 and maintaining patience during this seasonal downturn.

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 the fact that July in recent years has been filled with significant events that could shake the market.

• In July 2021, after a certain country banned BTC mining, the price of BTC plummeted to its annual low;
• In July 2022, several well-known cryptocurrency institutions entered bankruptcy proceedings;
• Although 2023 has been relatively calm, a large asset management company has submitted a BTC ETF application;
• The year 2024 is particularly tumultuous, with Mt.Gox starting to distribute assets at the beginning of the month, the German government selling off Bitcoin, Trump experiencing 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 where there are no signs of market overheating, choosing to continue holding spot assets 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) decreasing by 34% compared to the previous week. The seven-day average trading volume has dropped to $2.18 billion, the lowest record since October 15, 2024. This sluggish activity is mainly driven by a narrow consolidation range and a relatively calm news environment.

Bitcoin spot trading volume dropped 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 accounts for only 43% of the year but 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 also shows a similar pattern. The 7-day volatility has dropped to 0.79%, the lowest point since October 14, 2023. It is worth noting that in the past year, such a low 7-day volatility (below 1%) has only lasted for a maximum of two days, indicating that more substantial market fluctuations may occur in the short term. Historical data shows that even against the backdrop of mining policy adjustments in 2021, cryptocurrency company bankruptcies in 2022, and major political events in 2024, the average volatility in July, September, and October remains relatively low.

Despite the weak price trend, the capital flow has shown strong performance. Bitcoin ETPs (Exchange Traded Products) recorded a net inflow of 18,877 BTC in the past week, almost entirely contributed by the substantial inflow of funds into U.S. spot ETFs, setting the strongest single-week capital inflow record 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, entering a typical summer slump based on past patterns.

Derivatives Market

Overall, the low futures premium on a certain trading platform, limited capital flows in leveraged ETFs, and the low leverage and moderate yields in the perpetual contract market indicate that the market squeeze driven by leverage poses limited risks in the short term.

• A certain trading platform: The cryptocurrency futures on this platform performed moderately over the past week, with traders avoiding new directional positions, despite the important June contract expiry. The annualized premium for Bitcoin futures remains weak, hovering around 7-8%, and dipped 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 preference remains solid. Over the past week, the open interest on a certain trading platform decreased by 2,105 BTC, mainly because traders held onto June contracts worth 8,960 BTC until expiration. In the past two months, when the price of Bitcoin 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 7-day annualized funding rate averages 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, causing the price of perpetual contracts to remain below the spot price. The open interest in Bitcoin perpetual contracts is still far below the peak in May, essentially stagnating at the level of 266,000 Bitcoins, with only a slight rebound from last week's low of 257,000 Bitcoins.

• Options Market: Meanwhile, in the Bitcoin options market, due to prolonged price consolidation and reduced trading activity, the demand for directional bets has weakened, with term skew tending 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

In the past year, the relative leverage ratio of the altcoin market has surged dramatically. The ratio 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 of altcoins is much more active compared to a year ago.

Ethereum's open interest increased by 68%, rising from 3.5 million ETH to 6.88 million ETH. In contrast, Solana's open interest surged by 115%, from 13.2 million SOL to 28.3 million SOL. In comparison, Bitcoin's open interest remained relatively stable, changing from 263,000 BTC on July 1, 2024, to 266,000 BTC on July 1, 2025, highlighting that traders' focus is increasingly shifting towards altcoins.

However, despite the steady increase in the holdings of altcoins, the funding rates for altcoins depict a cautious market landscape. During the bullish market sentiment in November/December of last year, the average funding rate for the top five altcoins by market capitalization...