Original text: K33 Research
Compiled by: Yuliya, PANews
The market has entered a calm period, with trading volume dropping to a 9-month low and volatility hitting a 21-month low, suggesting that despite upcoming active dynamics in July, the market may experience a summer slowdown.
Despite the dense events and numerous messages in July, the market may still fall into a calm state. Based on the experiences of the past four years, every July has been accompanied by impactful events, either positive or negative, yet prices have remained strong, and traders seem more inclined to "enjoy life" rather than focus on trading. Is it hopeful to expect this year to be different, or is such thinking just wishful?
July Outlook - Another Calm Summer?
A series of busy events are on the horizon. 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: the "Big and Beautiful" budget plan, the end of the tariff suspension period, and the deadline for the latest cryptocurrency executive order are all on this month’s agenda.
Budget Plan: Trump signed the "Big and Beautiful" budget plan on July 5, Beijing time. The bill is controversial due to its expansionary nature, which could increase the U.S. deficit by $3.3 trillion. An expansionary fiscal budget is beneficial for scarce assets like Bitcoin, but this benefit may be overshadowed by renewed tariff discussions.
Tariff Issues: The 90-day tariff exemption period will end on July 9, and Trump is expected to make more comments regarding different countries, with the impact of new tariffs gradually revealed and adjusted throughout the month. Looking back at experiences from February to April, tariff uncertainty can easily suppress market sentiment, negatively impacting Bitcoin.
Cryptocurrency Executive Order: The third possibility is U.S. policy trends related to cryptocurrency. July 22 is the deadline for the latest cryptocurrency executive order, at which point the working group must submit a report recommending legislative and regulatory frameworks and assessing the U.S. digital asset reserves. This reserve was previously influenced by an executive order called the "Strategic Bitcoin Reserve." Although all deadlines for this order have passed, information regarding the current amount of Bitcoin held by the U.S. government, future procurement plans, or compensation to victims such as Bitfinex remains undisclosed. Even if no further information is released after July 22, decisions and announcements regarding the SBR could still emerge at any time.
These events could all impact BTC's trajectory, depending on which factor dominates: fiscal expansion or trade uncertainty. Additionally, the liquidity reduction caused by the July 4th Independence Day holiday in the U.S. may increase recent market uncertainty and make traders reluctant to take risks.
The evolving 'Trump Trade' and market sentiment
Trump's actions stir the market, an undeniable fact. In the six months since he took office, global uncertainty has increased, leading to a more sluggish market (especially in the cryptocurrency sector). From indicators such as funding rates, open contracts, leveraged ETF exposure, trading volume, and option skew, it's hard to imagine Bitcoin is only 5% away from its historical peak. In the current environment dominated by uncertainty, the market's risk preference is expressed very mildly through the above financial instruments, placing price and risk tolerance in a completely different structural state compared to previous bull market periods.
This suppressed risk preference can be interpreted as a positive signal for Bitcoin's future. Limited exuberance means that if subsequent trends improve, the risk of liquidation will also be lower. Currently, there is no reason for large-scale deleveraging in the market; overall leverage levels remain controlled, making it more suitable to continue holding spot and maintain patience during this seasonally slow market.
Historical repetition 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 has been filled with enough headline news to shake the market in recent years.
In July 2021, after China banned BTC mining, the BTC price plummeted to an annual low;
In July 2022, Three Arrows Capital and Celsius entered bankruptcy proceedings;
Although 2023 was relatively calm, BlackRock submitted a BTC ETF application;
2024 was particularly turbulent, with Mt. Gox beginning asset distribution at the start of the month, the German government selling Bitcoin, Trump surviving an assassination attempt and attending a BTC conference mid-month, and Biden withdrawing from the presidential race by 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
Figure 2: BTC and ETH performance last week
Trading activity in the spot market further weakened over the past seven days, with the average daily trading volume (ADV) down 34% from the previous week, and the 7-day average trading volume dropping to $2.18 billion, the lowest record since October 15, 2024. This sluggish activity is primarily driven by a narrow consolidation range and a relatively calm news environment.
Figure 4: Actual BTC/USD daily trading volume* (7-day average)
Figure 16: Percentage of monthly Bitcoin trading volume out of the total for each month from 2021 to 2024 (average + 2024 data)
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, only 43% of the year’s time is accounted for, yet 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.
Figure 5: BTC-USD Volatility
Volatility has exhibited a similar pattern. The 7-day volatility fell to 0.79%, the lowest since October 14, 2023. Notably, in the past year, the longest consecutive duration of such low 7-day volatility (below 1%) was only two days, indicating that more substantial market movements may occur in the short term. Historical data shows that even in the context of the 2021 China mining ban, the 2022 cryptocurrency enterprise bankruptcies, and significant political events in 2024, the average volatility in July, September, and October remains low.
Figure 3: Global Daily Net BTC ETP Capital Flow
Despite weak price trends, capital flows have performed strongly. Bitcoin ETPs (Exchange Traded Products) recorded a net inflow of 18,877 BTC in the past week, almost entirely contributed by substantial inflows from U.S. spot ETFs, setting the strongest single-week capital inflow record since May 28. However, the strong capital inflows stand in stark contrast to stagnant prices, indicating considerable selling pressure in the market.
Therefore, despite multiple potential market catalysts in July 2025, based on past patterns, the market may still linger in a state of low trading volume and low volatility, entering a typical summer weakness.
Derivatives Market
In summary, the muted CME futures premium, limited inflows into leveraged ETFs, and the low leverage and moderate yields in the perpetual contracts market all indicate that the market squeeze driven by leverage carries limited risk in the short term.
Figure 6: Caution spreads as we enter the second half of the year - CME BTC and ETH futures annualized rolling 1-month basis
Figure 7: Futures premium widens, next month contract activity sluggish - CME BTC futures: average daily premium for next month
CME: CME cryptocurrency futures performed flat over the past week, with traders avoiding new directional positions despite the significant expiration of June contracts, resulting in an overall muted risk exposure. The annualized premium for Bitcoin futures remains weak, hovering around 7-8%, and dipped to 6.5% in early Tuesday trading, marking the lowest level in the past 8 days.
Figure 8: Mild activity in futures ETFs - Futures-based ETFs: net inflow (in BTC equivalent)
Figure 9: Decrease of 8,960 BTC in open interest expiring in June - CME BTC futures: open interest
Leveraged ETFs: Activity in leveraged ETFs has also been mild, with small outflows occurring continuously since last Thursday, indicating that the market's low-risk preference remains firm. In the past week, CME's open contracts decreased by 2,105 BTC, primarily because traders held June contracts valued at 8,960 BTC until expiration. Over the past two months, when Bitcoin prices stayed above $100,000, its open contracts fluctuated in a narrow range of 145,000 to 160,000 BTC.
Figure 10: Perpetual contracts show no signs of risk preference - Bitcoin perpetual contracts: funding rate compared to BTC price
Figure 11: Stagnation of perpetual contract activity - Bitcoin perpetual contracts: open interest
Perpetual Contracts: The perpetual contracts market reflects the same cautious sentiment. The 7-day annualized funding rate averaged only 2.5%, far below the neutral level of 10.95%. This indicates a sustained lack of willingness in the market to establish new long positions, resulting in perpetual contract prices consistently being below spot prices. The open interest in Bitcoin perpetual contracts remains well below the peak in May, essentially stagnating at 266,000 BTC, only slightly rebounding from last week's low of 257,000 BTC.
Figure 12: Skew across maturities trending towards neutrality - BTC options: 25D skew (1 month + 6 months)
Figure 13: Implied volatility hits an annual low - BTC options: implied volatility
Options Market: Meanwhile, in the Bitcoin options market, due to long-term price stagnation and reduced trading activity, the demand for directional bets has weakened, and the skew across various maturities has trended towards neutrality. At the same time, the prolonged consolidation has compressed implied volatility to an annual low, with market expectations that the summer trend will continue to advance slowly.
The rise of altcoin derivatives market
Over the past year, the relative leverage ratio of the altcoin market has surged. The ratio of perpetual contract open interest to market capitalization nearly doubled, increasing from 3% on July 1, 2024, to 5.6% today, indicating that leveraged trading in altcoins is much more active compared to a year ago.
Figure 14: Ratio of altcoin open interest to market capitalization (OI/Total Market Cap Index, excluding USDT and USDC)
The nominal open interest in Ethereum grew by 68%, from 3.5 million ETH to 6.88 million ETH. Meanwhile, Solana's nominal open interest grew by 115%, from 13.2 million SOL to 28.3 million SOL. In contrast, Bitcoin's open interest remained basically unchanged, rising from 263,000 BTC on July 1, 2024, to 266,000 BTC on July 1, 2025, underscoring that traders' focus is increasingly shifting towards altcoins.
Figure 15: Funding Rates: Top Five Altcoins
Figure 16: Percentage of monthly Bitcoin trading volume out of the total for each month from 2021 to 2024 (average + 2024 data)
However, despite the steady rise in altcoin open interest, the funding rates for altcoins present a cautious market picture. During the market's high sentiment in November/December last year, the average funding rate for the top five altcoins by market capitalization (ETH, XRP, SOL, BNB, DOGE) soared to 60%, 35 percentage points higher than Bitcoin's funding rate during the same period. Yet in the first half of 2025, their funding rates have approached or even dipped below Bitcoin's levels, reflecting a risk-averse sentiment. This phenomenon of stable growth in open interest alongside moderate funding rates indicates that the overall market's positioning strategy is quite restrained.