July Expectations: Policy Variables and Market Calm, Can the Summer Slump Pattern Be Broken?

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 many dynamics in July, the market may experience a slowdown in summer growth.

Despite the numerous events and news in July, the market may still fall into a calm state. From the experience of the past four years, every July has been accompanied by either positive or negative impactful events, yet prices have remained strong, and traders seem to prefer to "enjoy life" rather than focus on trading. Is the hope for this year to be different just a fantasy?

July Outlook: Another Calm Summer?

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

• Budget Bill: Trump signed the "Big and Beautiful" budget bill on July 5, 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 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, negatively affecting Bitcoin.

• Cryptocurrency Executive Order: The third possible development is the U.S. policy direction related to cryptocurrency. July 22 is the final deadline for the latest cryptocurrency executive order, by which the working group must submit a report recommending legislative and regulatory frameworks and evaluating the U.S. digital asset reserves. This reserve was previously influenced by an executive order known as "Strategic Bitcoin Reserve." Although all deadlines of 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 yet been made public. Even if no further information is released after July 22, decisions and announcements regarding the SBR may still be issued 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 United States may increase recent market uncertainty and make traders reluctant to take risks.

Trump's policies and changes in market sentiment

Trump's actions are stirring 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 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 peak. In the current uncertainty-dominated environment, the market's risk appetite is expressed quite mildly through the aforementioned financial instruments, resulting in a completely different structural state for prices and risk tolerance compared to past bull market periods.

This suppressed risk appetite can be interpreted as a positive signal for the future of Bitcoin. Limited exuberance 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; the overall leverage level remains controlled, which is more suitable for continuing to hold spot positions and maintaining patience in this seasonally weak market.

Is the repetition of historical patterns or the opening of a new situation?

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 headline news significant enough to shake the market.

• In July 2021, the price of BTC plummeted to an annual low after China banned mining.
• In July 2022, certain well-known cryptocurrency institutions entered bankruptcy proceedings;
• Although 2023 has been relatively calm, large asset management companies have submitted BTC ETF applications;
• The year 2024 will be particularly turbulent, as an exchange platform begins distributing assets at the beginning of the month, the German government sells off Bitcoin, Trump survives an assassination attempt and attends the BTC conference in the middle of the month, and Biden withdraws 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) decreasing by 34% compared to the previous week. The 7-day average 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.

The trading volume of Bitcoin spot transactions 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 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 typically the quietest months of the year.

The volatility aspect 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 there may be more substantial market fluctuations in the short term. Historical data shows that even against the backdrop of the 2021 mining ban in China, the 2022 bankruptcy of crypto companies, and significant political events in 2024, the average volatility in July, September, and October remains relatively low.

Despite the weak price trend, capital flow has shown strong performance. Bitcoin ETP (Exchange-Traded Products) recorded a net inflow of 18,877 BTC over the past week, almost entirely contributed by a large inflow of funds into U.S. spot ETFs, marking the strongest single-week 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 several potential market catalysts in July 2025, the market may still hover in a typical summer sluggish state characterized by low trading volume and low volatility, based on past patterns.

Derivatives Market

Overall, the low futures premium on a certain trading platform, limited capital flow in leveraged ETFs, and the 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 Market: Cryptocurrency futures have performed flat over the past week, with traders avoiding new directional positions despite the significant June contract expiration, and overall risk exposure remains subdued. The annualized premium for Bitcoin futures remains weak, hovering around 7-8%, and fell to 6.5% during Tuesday morning trading, marking the lowest level in the past eight days.

• Leveraged ETF: The activity of leveraged ETFs has also been mild, with small outflows of funds since last Thursday, indicating that the market's low risk appetite remains firm. Over the past week, the open interest on a certain trading platform decreased by 2,105 BTC, mainly because traders held June contracts worth 8,960 BTC until expiration. Over the past two months, when the price of Bitcoin stayed 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 7-day annualized funding rate is only 2.5%, well 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 for Bitcoin perpetual contracts remains far below the May peak, 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 prolonged price stagnation and reduced trading activity, the demand for directional bets has weakened, and the term structure bias 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 advance slowly.

The rise of the altcoin derivatives market

In the past year, the relative leverage ratio of the altcoin market has surged dramatically. The open interest of its perpetual contracts relative to market capitalization has nearly doubled, growing 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.

The open interest in Ethereum has increased by 68%, rising from 3.5 million ETH to 6.88 million ETH. In contrast, the open interest in Solana has surged by 115%, from 13.2 million SOL to 28.3 million SOL. In comparison, the open interest in Bitcoin has remained largely unchanged, from