Crypto Market July Review: BTC Hits New High, Altseason Gaining Momentum

In July, the crypto market welcomed a strong surge as expected. Bitcoin rose 8.01% over the month and briefly broke through the $120,000 mark, setting a new historical high. This wave of gains was supported by active purchases from companies, continuous inflows of ETF and stablecoin funds, among other factors. However, expectations of interest rate cuts and changes in tariff policies have suppressed further rapid price increases and delayed the arrival of the altcoin season.

Since the beginning of 2023, individual and institutional investors in the United States have gradually increased their allocation to crypto assets represented by Bitcoin. In November 2024, the newly elected president established Bitcoin as a national strategic reserve and introduced a series of friendly policies, marking the official farewell of the crypto industry from its early stage.

However, deep participants face a complex situation. On one hand, BTC is driven to new highs by incoming funds; on the other hand, altcoins are performing poorly, with Ethereum having fallen below the price at the start of this bull market in April. However, Ethereum rebounded strongly by 48.80% in July.

Industry insiders believe that the encryption industry is at a historical turning point. Asset pricing logic is shifting from the previous supply-demand cycles and speculative frenzy to emerging options for global asset allocation. We are amidst a wave of significant changes in the industry.

Macroeconomics: Inflation Rebound and Weak Employment Data

In July, the US capital market was mainly influenced by three factors: the timing of the Federal Reserve's interest rate cuts, the direction of tariff policies, and the performance of economic and inflation data. The market maintained a bullish trend for most of the time, but saw a correction at the end of the month as news came in exceeding expectations.

The issue of the Federal Reserve lowering interest rates is full of drama. On one hand, there is political pressure, while on the other hand, the Federal Reserve insists on its dual mandate of "inflation + employment" and makes decisions based on data. There are also divisions within the Federal Reserve, with some board members supporting a quick interest rate cut.

After the FOMC meeting on July 31, the probability of a rate cut in September once fell to 41%. However, after the weak non-farm data released on August 1, that probability quickly rose to over 80%.

The S&P 500 has mostly risen due to interest rate cuts and corporate earnings expectations, but adjusted after July 28 as the probability of rate cuts decreased. Bitcoin also dropped below $115,000, with altcoins experiencing even larger declines.

In July, a new round of tariff policies exceeded market expectations. The current tariff system presents a complex multi-layered structure, with differentiated tax rates applied to different countries and regions. This has intensified market concerns about rising inflation, leading to a repricing in early August.

In terms of economic data, the U.S. Q2 GDP annual rate is 3%, better than expected. The financial reports of large technology companies show AI-driven investment and profit growth. However, consumer recovery remains weak, and overall corporate investment is sluggish.

The non-farm payroll data for July was significantly below expectations, with only 73,000 jobs added, far less than the expected 110,000. This has raised concerns in the market about a "soft landing," triggering a new round of pricing adjustments.

The Nasdaq, S&P 500, and Dow Jones indexes rose by 3.7%, 2.17%, and 0.08% respectively throughout the month. BTC increased by 8.01%, and Ethereum rose by 48.8%.

August US stocks still face downside risks. Although weak non-farm data has increased the probability of a rate cut in September, concerns about inflation rebounding remain. Inflation and employment data in the coming month will be closely watched.

Crypto Assets: Bitcoin is on the rise, altcoin season may be starting

In July, Bitcoin opened at 107173.21 USD, closed at 115761.13 USD, reached a low of 105119.70 USD, set a new high of 123231.07 USD during the month, with a monthly increase of 8.01%, a volatility of 16.9%, and a significant increase in trading volume.

From a technical perspective, Bitcoin is still operating above the 60-day moving average and the first bullish ascending trend line, with monthly trading volume increasing, indicating a new round of upward continuation. The monthly MACD fast and slow lines are still expanding, showing strong upward momentum.

In terms of contracts, the position size has continued to rise from the beginning of the month to the end of the month, but has clearly declined starting from the end of the month, indicating that some leveraged funds have chosen to hedge.

Another important event in July is that the altcoin season seems to show signs of restarting. Driven by corporate purchases, Ethereum rose 48.8% in a single month, and the ETH/BTC trading pair broke through technical resistance. With the expectation of interest rate cuts heating up and risk appetite improving, the altcoin season is highly likely to open again.

Chip Structure: Long-term Holders Initiate the Third Round of Sell-off

In July, long-term holders initiated the third wave of selling in this bull market, reducing their holdings by nearly 200,000 BTC, including 80,000 from an early wallet. Correspondingly, the holdings of short-term holders surged rapidly.

Bitcoin is flowing from long-term holders to short-term holders, increasing short-term liquidity and putting pressure on prices. However, the impact of early large holders selling on the market has significantly decreased compared to previous years, indicating an increase in market depth.

Centralized exchanges continue to see over 40,000 BTC flowing out, indicating sustained institutional purchases. Institutional allocation is the direct driving force behind the recent bull market in BTC. As of the end of July, publicly listed companies directly holding BTC have exceeded 4.5% of the total supply.

Since the beginning of this year, institutional direct purchases of BTC have surpassed the spot ETF channel, becoming the largest buyer in the market.

Capital Flow: $29.5 billion inflow, reaching the second highest in history

In July, a total of over 29.5 billion USD flowed into the crypto market, including 12 billion in stablecoins, 11.3 billion in Bitcoin and Ethereum spot ETFs, and 6.2 billion in corporate purchases. Corporate purchases were the single largest source of buying.

The inflow of 29.5 billion USD made July the second largest inflow month in history, serving as the material basis for Bitcoin to break through the long-term consolidation area and reach new highs. It is worth noting that total capital inflows have increased for five consecutive months.

American companies' allocation to BTC continues to accelerate, with an increasing number of participating companies, which is expected to further drive up prices.

In addition, the inflow of Ethereum spot ETFs reached a historic high of $5.298 billion, close to Bitcoin spot ETFs at $6.061 billion. This is driven by rising expectations of interest rate cuts and the further popularization of crypto assets in the United States, with more and more capital flowing into Ethereum. The number of companies allocating Ethereum is also increasing, accounting for 2.6% of the total circulation, although lower than Bitcoin's 4.6%, but the growth rate is very fast.

Conclusion

Multi-dimensional analysis shows that Bitcoin is still in the consolidation phase of the fourth wave of this bull market, and it is highly likely to continue to rise after the fluctuations in August.

Leading by Ethereum, as interest rate cuts approach, market risk appetite is expected to rise, and the altcoin season is likely to begin.

Tariff conflicts, US inflation, and employment data constitute major risk factors.