Author: K33 Research; Compiled by: Yuliya, PANews
The market has entered a quiet period, with trading volume falling to a 9-month low and volatility hitting a 21-month low, suggesting that the market may be experiencing a summer slowdown despite the active dynamics ahead in July.
Despite the dense events and abundant news in July, the market may still fall into a quiet period. Based on the experience of the past four years, every July is accompanied by shock events that are either good or bad, but prices remain strong, and traders seem to prefer "enjoying life" rather than watching the market. Is it just a fantasy to expect this year to be different?
July Outlook - Another Quiet Summer?
A series of busy events are coming. Trump's actions continue to affect the market, distort risk sentiment, and drive the price of Bitcoin. July will be shrouded by Trump’s potential impact: the “Big, Beautiful” budget, the end of the tariff suspension period, and the latest crypto executive order deadline are all scheduled this month.
Budget: Trump signed the “Big, Beautiful” budget on July 5 Beijing time. The bill is controversial for its expansionary nature and may increase the US deficit by $3.3 trillion. Expansionary fiscal budgets are good for scarce assets like Bitcoin, but this positive may be overshadowed by the renewed discussion of tariffs.
Tariff issues: The 90-day tariff exemption period will end on July 9, and Trump is expected to make more comments on different countries. The impact of new tariffs will be gradually revealed and adjusted throughout the month. Looking back at the experience from February to April, tariff uncertainty can easily suppress market sentiment and have a negative impact on Bitcoin.
Crypto Executive Order: The third possible development is US policy related to cryptocurrencies. July 22 is the final deadline for the latest crypto executive order, when the working group will submit a report recommending legislation and regulatory frameworks and assessing the US digital asset reserves. The reserves were previously affected by an executive order called the "Strategic Bitcoin Reserve". Although all deadlines for the order have passed, information about the current number of Bitcoins held by the US government, future purchase plans, or compensation to victims such as Bitfinex has not been made public. Even if no more information is released after July 22, decisions and announcements around the SBR may still be made at any time.
All of these events may affect BTC trends, depending on which factor dominates, fiscal expansion or trade uncertainty. In addition, the reduction in liquidity caused by the July 4th Independence Day holiday in the United States may increase market uncertainty in the near term and make traders reluctant to take risks.
The Evolving "Trump Trade" and Market Sentiment
It is an indisputable fact that Trump's actions have stirred the market. In the six months since he took office, global uncertainty has increased, causing the market (especially the crypto market) to become more sluggish. Judging from indicators such as funding rates, open interest, leveraged ETF exposure, trading volume and option skew, it is hard to imagine that Bitcoin is only 5% away from its historical high. In the current uncertainty-dominated environment, the market's risk appetite is very mild through the above-mentioned financial instruments, which puts prices and risk tolerance in a completely different structural state than in previous bull markets.
This suppressed risk appetite can be interpreted as a positive signal for the future of Bitcoin. Limited enthusiasm means that if the market picks up later, the liquidation risk will also be lower. There is no reason for large-scale deleveraging in the market at present, and the overall leverage level is still under control, which is more suitable for continuing to hold spot and being patient in this seasonally weak market.
History repeats itself or breaks the routine?
Looking back at 2021 to 2024, July is the second least active month of the year in terms of trading volume, although July in the past few years has been full of headlines that could shake the market.
In July 2021, BTC prices plummeted to annual lows after China banned BTC mining;
In July 2022, Three Arrows Capital and Celsius entered bankruptcy proceedings;
Although 2023 was relatively calm, BlackRock submitted an application for a BTC ETF;
2024 was particularly turbulent, with Mt.Gox starting to distribute assets and the German government selling Bitcoin at the beginning of the month, Trump suffered an assassination attempt in the middle of the month and attended the BTC conference, and Biden withdrew from the presidential campaign at the end of the month.
In an environment where there are no signs of overheating in the market, it may be a safer strategy to continue holding spot and remain patient.
In-depth analysis of market data
Performance of spot market
Trading activity in the spot market has further weakened in the past seven days, with the average daily trading volume (ADV) down 34% from the previous week, and the 7-day average daily trading volume falling to US$2.18 billion, the lowest record since October 15, 2024. This sluggish activity is mainly driven by a narrow consolidation range and relatively calm news.
Volatility also shows a similar pattern. The 7-day volatility dropped to 0.79%, the lowest since October 14, 2023. It is worth noting that in the past year, the longest continuous duration of such low 7-day volatility (below 1%) was only two days, which suggests that more substantial market changes may occur in the short term. Historical data shows that even against the backdrop of China's mining ban in 2021, crypto bankruptcies in 2022, and major political events in 2024, the average volatility in July, September and October is still low.
Despite the weak price trend, capital flows have been strong. Bitcoin ETPs (exchange-traded products) recorded a net inflow of 18,877 BTC in the past week, which was almost entirely contributed by a large inflow of funds from US spot ETFs, setting the strongest single-week capital inflow record since May 28. However, the strong inflows are in sharp contrast to the stagnant prices, indicating that there is considerable selling pressure in the market.
Therefore, despite the presence of multiple potential market catalysts in July 2025, based on past patterns, the market is still likely to linger on a backdrop of low trading volume and low volatility, entering a typical summer soft state.
Derivatives Market
Taken together, low CME futures premiums, limited leveraged ETF flows, and low leverage and modest yields in the perpetual contract market indicate that the risk of a leverage-driven market squeeze is limited in the short term.
CME: CME cryptocurrency futures had a lackluster week as traders avoided new directional positions, and overall risk exposure remained flat despite the important June contract expiration. The annualized premium for Bitcoin futures remained weak, hovering around 7-8%, and slipped to 6.5% in early trading on Tuesday, the lowest level in the past 8 days.
Leveraged ETFs: Activity in leveraged ETFs was similarly muted, with small outflows since Thursday, suggesting that the market’s low-risk appetite remains solid. Open interest on CME fell by 2,105 BTC over the past week, driven primarily by traders holding onto 8,960 BTC worth of June contracts until expiration. Over the past two months, when Bitcoin’s price remained above $100,000, its open interest has been moving in a narrow range of 145,000 to 160,000 BTC.
Perpetual Swaps: The same cautious sentiment is reflected in the perpetual swap market. The 7-day annualized funding rate averaged just 2.5%, well below the neutral level of 10.95%. This indicates a continued lack of appetite to take new long positions, causing perpetual swaps to trade below spot prices. Bitcoin perpetual swap open interest remains well below May highs, essentially stagnating at 266,000 BTC, having rebounded only slightly from last week’s low of 257,000 BTC.
Options Market: Meanwhile, in the Bitcoin options market, due to the long-term sideways price and reduced trading activity, the market's demand for directional bets weakened, and the skew of various maturities tended to be neutral. At the same time, the long-term consolidation has compressed the implied volatility to a new low for the year, and the market expects that the summer market will continue to advance slowly.
The rise of the altcoin derivatives market
Over the past year, the relative leverage of the altcoin market has risen sharply. The proportion of its perpetual contract holdings relative to market value has almost doubled, from 3% on July 1, 2024 to 5.6% today, indicating that leveraged trading in altcoins is much more active than a year ago.
Ethereum's nominal open interest increased by 68%, from 3.5 million ETH to 6.88 million ETH. Solana's nominal open interest increased by 115%, from 13.2 million SOL to 28.3 million SOL. In contrast, Bitcoin’s open interest remained largely unchanged, moving from 263,000 BTC on July 1, 2024 to 266,000 BTC on July 1, 2025, highlighting that traders’ focus is increasingly shifting toward altcoins.
