Bitcoin Surges 7% as Inflation Cools and Fed Turns Dovish

Bitwise has issued a warning that Bitcoin could soon experience a significant surge. The latest Crypto Market Compass from Bitwise Europe indicates that all major indicators of risk appetite, liquidity, and macro momentum are favoring Bitcoin. The study highlights that Bitcoin has already rebounded from $101,000 to approximately $108,000 in the past week, driven by a combination of cooling inflation, improving geopolitical conditions, and a more dovish stance from the Federal Reserve.

Bitwise’s proprietary Cryptoasset Sentiment Index has reached its most optimistic level since May, signaling a bullish sentiment. This optimism is fueled by a substantial influx of capital into exchange-traded products, with cumulative net inflows to global Bitcoin ETPs reaching a year-to-date record of $14.3 billion. The report suggests that this influx could signal potential upside opportunities for Bitcoin's price.

Investors are embracing risk due to a decline in macro uncertainty. July could see new US trade accords with various partners, and there has been a conciliatory tone in geopolitical discussions. Additionally, Fed Chair Jerome Powell has linked the timing of rate cuts to progress on tariff talks, leaving the door open for looser monetary policy in the near future. The report summarizes the current mood as a "trifecta of declining geopolitical risks, trade policy uncertainty, and potential monetary policy stimulus" that should continue to lift market sentiment and provide a significant tailwind for Bitcoin and other crypto assets.

On-chain signals also support this bullish outlook. Whale wallets withdrew 8,740 BTC from exchanges last week, and exchange reserves sank to 2.898 million BTC, which is just 14.6% of the total supply. Net selling pressure on spot venues fell from $2.2 billion to $0.5 billion. Derivatives markets show a more nuanced picture, with futures open interest sliding by 20,000 BTC and bearish perpetual funding rates hinting at lingering short bias. However, options markets indicate that traders are standing down, with put-call open interest falling to 0.59 and one-month implied volatilities easing toward 38%. Bitwise interprets this as short-term consolidation within an intact longer-term uptrend.

Traditional markets are also showing signs of thawing. Bitwise’s Cross-Asset Risk Appetite (CARA) index jumped from 0.31 to 0.49, indicating that capital is rotating back into growth-sensitive trades. Some 70% of tracked altcoins outperformed Bitcoin last week, a breadth thrust historically associated with early-cycle bull phases.

In its bottom-line assessment, Bitwise stops short of providing specific price targets but leaves little doubt about the direction of Bitcoin's movement. As long as geopolitical détente, trade breakthroughs, and an accommodative Fed converge with relentless ETF inflows, a decisive return in global risk appetite is likely to keep Bitcoin on an upward trajectory. If US spot ETFs secure just three more sessions of net inflows this week, surpassing their 2024 record, the market may discover how quickly a supply-constrained asset can react when the macro wind blows at its back.