Bitcoin's Momentum Wanes as Spot Trading Volume Cools, ETF Inflows Continue

Bitfinex analysts have recently highlighted that an immediate surge in Bitcoin's price is unlikely in the near future. This assessment is based on the cooling of spot trading volume and the weakening of taker buy pressure. Despite the slowing spot activity, US-based spot Bitcoin ETFs have experienced 14 consecutive days of net inflows, indicating sustained institutional interest. However, the upcoming Federal Reserve interest rate decision on July 30 is a significant macroeconomic factor that could influence Bitcoin's trajectory.

Bitcoin's rally through the first half of the year has been notable, but recent data suggests that the momentum may be waning. Analysts at Bitfinex have observed signs of consolidation, which reduces the likelihood of another substantial upward move in the near term. Bitcoin closed June at $107,000, marking a historically strong performance. However, underlying metrics such as spot trading volume, ETF inflows, and long-term holder behavior are beginning to shift, potentially redirecting the crypto market's future.

Bitfinex's latest markets report indicates that Bitcoin's powerful uptrend was driven by institutional inflows and macroeconomic optimism. However, this momentum is now losing steam. Spot volume has cooled, taker buy pressure has weakened, and profit-taking has intensified, particularly from short-term holders who entered the market below $80,000 and are now securing gains. This trend suggests that Bitcoin may be entering a phase of sideways trading or mild retracement, rather than a full reversal. The reduced trading activity makes it less likely that Bitcoin will experience another explosive upward move soon.

Despite the slowing spot market activity, institutional demand remains robust. US-based spot Bitcoin ETFs have seen 14 consecutive days of net inflows worth $4.63 billion as of June 27. Economist Timothy Peterson described last week’s $2.2 billion inflows as "massive" and predicted a 70% chance of positive inflows continuing into the next week. Continued inflows are crucial for balancing the recent selling pressure from both short-term and long-term holders. If ETF demand weakens, Bitcoin's support above the $100K level could be tested.

Another critical factor influencing Bitcoin's next move is macroeconomic policy, particularly the upcoming Federal Reserve interest rate decision on July 30. Lower interest rates are generally bullish for risk assets like Bitcoin, as they make borrowing cheaper and reduce the appeal of traditional assets. As of now, there is only a 21% chance that the Fed will cut rates at the July meeting. However, any dovish comments or signs of future easing could inject fresh energy into the Bitcoin and crypto markets.

Despite the current market indecision, Bitcoin's June close stands as its highest ever monthly close around $107,000. This marked the third consecutive green monthly candle this year and has contributed to its strong rebound from the April low of $75,000. However, technical analysts have noted that the June candle formed a spinning top pattern, indicating market indecision. A similar pattern appeared in July 2024 and was followed by an 8.6% price drop the next month. While history does not always repeat, traders are closely monitoring the situation. Investors are advised to approach the Bitcoin market with caution, especially in July.