July Market Outlook: Trump Policies VS Market Anomalies, Summer Weakness or a Different Script?

The market has entered a rare period of calm. Trading volume has dropped to a 9-month low, and volatility has reached a 21-month low, which seems to suggest that despite several important events in July, the market may continue to experience a slowdown in growth during the summer.

The experience of the past four years shows that every July is accompanied by significant events, but prices tend to remain relatively stable. Traders seem to prefer to "enjoy life" during this month rather than being busy with operations. Will this July break this pattern? Let's wait and see.

July Outlook: Another Calm Summer?

A series of important events are about to unfold. The actions of a certain political figure continue to affect the market, distorting risk sentiment and driving the price movements of Bitcoin. July will be overshadowed by three potential factors: the "Big and Beautiful" budget proposal, the end of the tariff suspension period, and the deadline for the latest cryptocurrency executive order, all of which are scheduled for this month.

• Budget Proposal: A controversial expansionary budget proposal is set to be signed on July 5. The bill could increase the U.S. deficit by $3.3 trillion. Expansionary fiscal budgets are generally positive 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 more comments are expected to be made regarding different countries. The impact of the new tariffs will gradually become apparent throughout the month. Looking back at the experience from February to April this year, tariff uncertainty can easily suppress market sentiment, negatively affecting Bitcoin.

• Crypto Executive Order: July 22 is the final deadline for the latest crypto executive order, by which the working group must submit a report, recommend legislative and regulatory frameworks, and assess the United States' digital asset reserves. These reserves were previously affected by an executive order known as "Strategic Bitcoin Reserves." Although all deadlines for this order have passed, information regarding the current government's Bitcoin holdings, 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 could still be made at any time.

These events may all affect the BTC trend, depending on which factor dominates between fiscal expansion and trade uncertainty. In addition, the decrease in liquidity caused by the July 4th Independence Day holiday in the United States may increase recent market uncertainty and make traders more cautious.

The Impact of Evolving Policies and Market Sentiment

Certain policy actions have undoubtedly stirred the market. In the past six months, global uncertainty has increased, leading to a more sluggish market (especially the crypto market). Based on 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 expressed very mildly through the aforementioned financial instruments, placing prices and risk tolerance in a completely different structural state compared to previous bull markets.

This suppressed risk appetite can be interpreted as a positive signal for Bitcoin's future. Limited exuberance means that if the subsequent market warms up, the liquidation risk 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 downturn.

Is history repeating itself or breaking the norm?

Looking back from 2021 to 2024, July has been the second least active month of the year in terms of trading volume, despite the fact that July in the past few years has been filled with headlines capable of shaking 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 well-known crypto institutions entered bankruptcy proceedings;
• Although 2023 has been relatively calm, a large asset management company has submitted a BTC ETF application;
• The year 2024 will be particularly turbulent, with a large exchange beginning to distribute assets at the beginning of the month, a certain government selling off Bitcoin, a noteworthy political event occurring in the middle of the month, and significant political changes 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

Trading activity in the spot market further weakened over the past week, with the average daily trading volume (ADV) dropping 34% compared to the previous week. The 7-day average trading volume has fallen to $2.18 billion, marking the lowest record since October 15, 2024. This sluggish activity is primarily driven by a narrow consolidation range and relatively calm news flow.

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 the 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 usually the quietest months of the year.

The volatility also shows a similar pattern. The 7-day volatility has decreased 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 certain countries' mining bans in 2021, the bankruptcy of crypto companies in 2022, and significant political events in 2024, the average volatility in July, September, and October remains relatively low.

Despite the weak price trends, capital flows have shown strong performance. Bitcoin ETPs (Exchange Traded Products) recorded a net inflow of 18,877 BTC over the past week, almost entirely contributed by substantial capital inflows from the US spot ETFs, marking the strongest single-week capital inflow since May 28. However, the strong capital inflows stand in stark contrast to stagnant prices, indicating significant selling pressure in the market.

Therefore, despite the presence of multiple potential market catalysts in July 2025, the market may still linger under low trading volume and low volatility, entering a typical summer slump according to 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 yields in the perpetual contract market indicate that the market squeeze driven by leverage poses limited risk in the short term.

• Futures Market: Cryptocurrency futures had a lackluster performance over the past week, with traders avoiding new directional positions despite the significant June contract expiration. 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 8 days.

• Leveraged ETF: The activity of leveraged ETFs has also been mild, with small outflows of funds occurring continuously since last Thursday, indicating that the market's low-risk preference remains solid. Over the past week, the open interest on a certain exchange 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 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 7-day annualized funding rate averages 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 remaining below spot prices. The open interest for Bitcoin perpetual contracts is still far below the peak in May, essentially stagnant at the level of 266,000 Bitcoins, 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 reduced trading activity, the demand for directional bets has weakened, and the skew across various maturities has become neutral. At the same time, the long-term consolidation has compressed implied volatility to an 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 risen sharply. The proportion of open interest in perpetual contracts relative to market capitalization has 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.

The notional open interest of Ethereum increased by 68%, rising from 3.5 million ETH to 6.88 million ETH. Meanwhile, the notional open interest of Solana surged by 115%, from 13.2 million SOL to 28.3 million SOL. In contrast, the open interest of Bitcoin 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 altcoins