Crypto Market Outlook for July: The Game of Trump Policies and Seasonal Factors

As the market enters a calm period, trading volume has dropped to a 9-month low, and volatility has reached a 21-month low, which indicates that despite a series of important events in July, the market may still continue the trend of slowing growth seen in the summer.

Key Events in July

Several important events will take place in July that may impact the crypto market:

1. Budget Proposal: The expansionary budget proposal signed on July 5 may increase the U.S. deficit by $3.3 trillion, which could be beneficial for scarce assets like Bitcoin.

2. Tariff issues: The 90-day tariff exemption period will end on July 9, and the impact of the new tariff policy will gradually become apparent. Previously, uncertainty regarding tariffs had a negative effect on Bitcoin prices.

3. Encryption Policy: July 22 is the deadline for the latest crypto market regulatory framework report. In addition, information regarding the U.S. government's Bitcoin holdings and future procurement plans may also be announced soon.

These events may affect the BTC trend, depending on which factor dominates: fiscal expansion or trade uncertainty. The reduced liquidity due to the July 4th Independence Day holiday in the United States may also increase recent market uncertainty.

Market Sentiment Analysis

Current market risk appetite is relatively low. From the perspective of funding rates, open interest, and leveraged ETF exposure, market sentiment is relatively mild. This suppressed risk appetite can be interpreted as a positive signal for the future of Bitcoin. Limited euphoria means that if the market recovers later, the liquidation risk will also be lower.

Historical Data Review

Looking back from 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 filled with significant events:

• July 2021: After China banned BTC mining, BTC price plummeted to an annual low.
• July 2022: Three Arrows Capital and Celsius entered bankruptcy proceedings.
• July 2023: A large asset management company submitted a BTC ETF application.
• July 2024: Mt. Gox begins asset distribution, the German government sells Bitcoin, and other events.

In-depth Analysis of Market Data

spot market performance

Trading activity in the spot market further weakened, with the daily average trading volume on the 7th dropping to $2.18 billion, a new low in 9 months. The spot trading volume of Bitcoin continued the generally sluggish trading trend of the summer. Historical data shows that from June to October, it accounted for only 43% of the year, but contributed only 32% of the annual trading volume.

In terms of volatility, the 7-day volatility has decreased to 0.79%, the lowest point in 21 months. Historical data shows that even in the context of major events, the average volatility in July, September, and October remains relatively low.

Despite weak price trends, capital flows have shown strong performance. Bitcoin ETP recorded a net inflow of 18,877 BTC over the past week, marking the strongest single-week capital inflow since May 28. However, the strong capital inflow stands in stark contrast to stagnant prices, indicating significant selling pressure in the market.

derivatives market

Overall, the low futures premium, limited fund flows in leveraged ETFs, and the low leverage and moderate yield in the perpetual contract market indicate that the market squeeze driven by leverage has limited risk in the short term.

• Futures Market: The annualized premium for Bitcoin futures remains weak, hovering around 7-8%.

• Leveraged ETF: The activity is moderate, indicating that the market's low-risk preference remains solid.

• Perpetual Contract: The 7-day annualized funding rate averages only 2.5%, far below the neutral level of 10.95%.

• Options market: The skew across various maturities tends toward neutrality, with implied volatility compressed to a new annual low.

The rise of the altcoin derivatives market

In the past year, the relative leverage ratio in the altcoin market has surged dramatically. The ratio of perpetual contract open interest to market capitalization has grown from 3% on July 1, 2024, to 5.6% today. The nominal open interest for Ethereum and Solana has increased by 68% and 115%, respectively, while Bitcoin's open interest has remained relatively unchanged, highlighting that traders' focus is increasingly shifting towards altcoins.

However, despite the steady increase in the holdings of altcoins, their funding rates have shown a cautious trend. In the first half of 2025, the average funding rates of the top five altcoins by market capitalization have been approaching or even falling below the levels of Bitcoin, indicating a risk-averse sentiment.

Overall, despite several potential market catalysts in July, the market may still hover in a context of low trading volume and low volatility, entering a typical summer lull based on past patterns.