On Monday (July 21), Bitcoin traded at around $118,300, slightly below last week's record high of $123,000. Ethereum once again outperformed the world's largest crypto asset, trading at $3,750.15, up 4% in the past 24 hours and up 26% over the past week, with funds continuing to flow into high Beta assets.
Bitcoin is holding steady around $118,300, consolidating in a narrow range. After a strong early session driven by institutional funds, there was a sell-off at the end of the session, breaking below the key support of $118,000, indicating a potential deeper correction.
Ethereum rose by 3.78%, with institutional funds continuing to flow in, while funds are being withdrawn from small-cap altcoins. Analysts warn that rising momentum and $331 million in bearish bets could trigger short covering, further boosting the market.
The CoinDesk 20 index reports 4,071.75, showing that investor appetite remains strong. However, new data from CryptoQuant suggests that turbulence may be brewing beneath the surface of the market.
On Monday morning, Bitcoin's market share briefly fell below 60%, the first time since March of this year. This measure of Bitcoin's share of the total market capitalization of cryptocurrencies dropped to 59.8% at one point in the morning.
This decline reflects a stronger performance of altcoins among major digital assets. Ethereum rose by 4%, while Ripple (XRP) and Solana rose by 2% and 3%, respectively. During the same period, Bitcoin itself fell by 1%.
Market dynamics indicate that portfolios are accelerating rebalancing towards alternative cryptocurrencies. Thematic tokens have also surged significantly, driven by the overall strength of altcoins. As of this writing, Bitcoin's market share has rebounded to 60.1%.
On-chain dynamics
On July 15, the number of Bitcoins flowing into exchanges surged to 81,000 BTC, the highest single-day inflow since February this year. This inflow was driven by 'whales' and miners: the total amount transferred in single transactions exceeding 100 BTC skyrocketed from 13,000 BTC to 58,000 BTC, while miner outflows reached 16,000 BTC, almost all deposited directly into exchanges.
Ethereum exhibited a similar pattern. On July 16, approximately 2 million ETH flowed into exchanges, the highest single-day inflow since the end of February, with total inflows up 131% since April.
CryptoQuant also noted that miner wallet balances have fallen from 68,000 BTC to 65,000 BTC since June 26, further confirming the view that miners are taking profits from last week's market.
Large holders and miners are selling at high levels, suggesting the market may be at a local top or entering a phase of increased volatility. Historically, inflows of this magnitude often signal a price correction, making this a cautious signal for traders. Despite the overall bullish momentum still existing, these signals cannot be ignored.
Singapore-based market maker Enflux is closely monitoring technical indicators. In a recent report to CoinDesk, the company stated, 'Liquidity remains healthy, and we are watching for confirmation signals in perpetual contract open interest and altcoin depth. If Ethereum's dominance continues to rise, we expect trailing trends in mid-cap coins to continue into next week.'
Meanwhile, the inflow into altcoins remains sluggish. The daily trading volume of altcoin inflows to exchanges was only 31,000 transactions, far below the 120,000 transactions seen at market peaks in March and December 2024.
CryptoQuant believes this indicates low selling pressure; altcoin holders may have stronger conviction, slower capital rotation, or are simply waiting for new catalysts. Currently, Bitcoin and Ethereum remain the focus of the market, but OTC funds could become active at any time.
Japanese elections drive the process of cryptocurrency tax reform.
The Japanese Liberal Democratic Party has suffered its worst electoral defeat in decades. For the first time since 1955, it has lost its majority in both houses of parliament. The coalition partner Komeito lost at least two seats in the Sunday Senate election, failing to maintain control.
This historic shift has exacerbated unprecedented political instability against the backdrop of rising living costs and stagnant wages. As the populist opposition gains more leverage, Prime Minister Shio Abe faces calls for resignation within his party. The market expects volatility as the government negotiates from a weak position.
The election results have significantly accelerated discussions on cryptocurrency tax reform. The opposition party broadly campaigned for tax cuts, especially targeting crypto assets. The Japan Blockchain Association has submitted a proposal to change the current maximum comprehensive tax rate of 55% to a single separate tax rate of 20.315%.
Despite high taxes, Japan remains the fifth largest cryptocurrency trading market in the world. The Bitcoin to Yen trading pair is the third largest market globally, and regulatory restrictions have not hindered demand. Corporate Bitcoin adoption is also accelerating in Japan, with MetaPlanet becoming the fifth largest institutional holder in the world.
