July Market Outlook: Policy Trends vs Historical Lows, Will the Summer Market Be Different?

The market is currently in an unusually calm period, with trading volumes dropping to a nine-month low and volatility reaching its lowest level in 21 months. This situation seems to indicate that, although some significant events may occur in July, the market may still continue the trend of slow growth seen in the summer.

Experience from the past four years shows that some significant events occur every July, whether positive or negative. However, prices tend to remain relatively stable, and traders seem more inclined to enjoy life rather than closely monitor the market. So, will this year be any different?

July Outlook: Another Calm Summer?

A series of important events is approaching. Policymakers' actions continue to impact the market, distorting risk sentiment and driving the price movements of Bitcoin. Three potential important influencing factors will emerge in July: the budget proposal, tariff policy, and cryptocurrency-related policies.

• Budget Bill: A new budget bill will be signed on July 5. The bill is controversial due to its expansionary nature, potentially increasing the government deficit by $3.3 trillion. Expansionary fiscal budgets are usually favorable for scarce assets like Bitcoin, but this benefit may be overshadowed by subsequent tariff discussions.

• Tariff Issues: The 90-day tariff exemption period will end on July 9, and more comments are expected to be made regarding different countries. The impact of the new tariffs will be gradually 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.

• Cryptocurrency Policy: July 22 is the final deadline for the latest cryptocurrency-related policies, by which time the relevant working groups must submit reports, recommend legislative and regulatory frameworks, and assess the government's digital asset reserves. This reserve has previously been affected by a policy known as "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 still not been made public. Even if no more information is released after July 22, decisions and announcements surrounding this policy may still be issued at any time.

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

The Impact of Evolving Policies on Market Sentiment

The actions of policymakers stir the market, which is an undeniable fact. Recently, global uncertainty has increased, leading to a more sluggish market (especially the crypto market). From 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 historical high. In the current environment dominated by uncertainty, the market's risk appetite is reflected very mildly through the aforementioned financial instruments, resulting in prices and risk tolerance being 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 enthusiasm means that if the market warms up subsequently, the risk of liquidation 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 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 recent years being filled with headlines significant enough to shake the market.

• In July 2021, after a certain country banned BTC mining, the price of BTC plummeted to an annual low;
• In July 2022, several large cryptocurrency companies entered bankruptcy proceedings;
• Although 2023 has been relatively calm, a certain asset management giant has submitted a BTC ETF application;
• The year 2024 is particularly turbulent, as at the beginning of the month a certain trading platform starts distributing assets, a certain national government sells off Bitcoin, mid-month political figures attend the BTC conference, and by the end of the month the presidential election situation changes.

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

In-Depth Analysis of Market Data

Spot Market Performance

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

The Bitcoin spot trading volume fell to its lowest level since September 2024 in June 2025, continuing the generally sluggish trading trend of summer. Historical data shows that from June to October, which accounts for only 43% of the year, it contributed 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 typically the quietest months of the year.

Volatility has also shown a similar pattern. The 7-day volatility has decreased to 0.79%, the lowest point since October 14, 2023. It is noteworthy that in the past year, the longest consecutive duration of such a low 7-day volatility (below 1%) has only lasted for two days, indicating that more substantial market fluctuations may occur in the short term. Historical data shows that even against the backdrop of a certain country's mining ban in 2021, the bankruptcy of crypto companies in 2022, and major 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. Bitcoin ETP (Exchange Traded Product) recorded a net inflow of 18,877 BTC in the past week, almost entirely contributed by significant capital inflows from a certain country’s spot ETF, 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 considerable selling pressure in the market.

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

Derivatives Market

Overall, the low futures premium of a certain exchange, limited capital flow in leveraged ETFs, and the low leverage and moderate yield in the perpetual contract market indicate that the market squeeze driven by leverage poses limited risk in the short term.

• Some Exchange: The cryptocurrency futures on this exchange performed modestly over the past week, with traders avoiding new directional positions despite the significant June contract expiry. Overall risk exposure remains subdued. The annualized premium for Bitcoin futures remains 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 occurring continuously since last Thursday, indicating that the market's low-risk preference remains solid. Over the past week, the open interest in a certain exchange 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 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 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 perpetual contract prices consistently being lower than spot prices. The open interest of Bitcoin perpetual contracts remains well below the peak in May, essentially 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 decreased trading activity, the demand for directional bets has weakened, and the term structure skew has tended 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 of the altcoin market has surged sharply. 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 leverage trading in altcoins is much more active compared to a year ago.

The nominal open interest of a certain mainstream token has increased by 68%, rising from 3.5 million to 6.88 million. Meanwhile, another mainstream token's nominal open interest has grown by 115%, from 13.2 million to 28.3 million. In contrast, Bitcoin's open interest has 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,