Bitcoin's early July bounce rides thin summer liquidity as half of supply still sits underwater: analysts

Bitcoin (BTC) traded around $63,500 on Tuesday, holding most of the gains from a six-session rally that lifted it off the lows of a brutal June, according to The Block's prices page.

The rebound has split analysts between a near-term recovery still short of confirmation and a longer-term structural signal pointing to a bottom.

A relief rally on thin liquidity

Wintermute read the week's move as a textbook relief rally driven by easing macro conditions, a Federal Reserve leaning slightly more dovish, de-escalation in the Middle East, and promising institutional headlines around Ethereum, all landing on an asset class bombed out through the first half of 2026.

The OTC desk and market maker said that mix was enough to explain the bounce without a larger story behind it.

Indeed, crypto led the risk-on move by a wide margin. Ether (ETH) rose 13.5% on the week, and bitcoin gained 6.75%, both well ahead of the S&P 500's 2.2% and the Nasdaq's 0.9%, according to Wintermute. The desk traced the catalyst to a soft U.S. payrolls print of 57,000 against a 110,000 consensus, the weakest in four months, with prior months revised lower. Also, the report cut the odds of a rate hike before year-end to roughly 25%, Wintermute said.

Bitcoin's leg looked cleaner than the other majors, backed by real accumulation. Whale wallets added more than 270,000 BTC near the 200-week moving average, and options flow rotated from downside protection toward $60,000 to $70,000 calls, according to the firm.

Ether ran hotter, but on a catalyst, as the market appeared to be front-running, Wintermute said. The Ethereum Institutional launch on July 1 landed on a foundation that had just cut a fifth of its staff and 40% of its budget, alongside roughly $345 million in spot ether exchange-traded fund outflows the prior week.

The ETF signal remains unproven

Wintermute flagged one genuine data point in the flow picture.

The persistent bitcoin ETF outflow trend broke on July 2 with a $221.7 million single-day inflow that ended a 10-day, $2.73 billion outflow streak, the desk said.

One session does not make a trend, the desk cautioned. Year-to-date outflows remain at $5.4 billion, and BlackRock's IBIT bled for an 11th straight day even as headline flows turned positive, according to Wintermute.

Fresh data offered a firmer note, too. Spot bitcoin ETFs recorded a net inflow of $266 million on July 6, led by $209 million into IBIT, according to SoSoValue, which tracks U.S.-listed funds. Spot ether ETFs took in $20.7 million, led by $23.3 million into BlackRock's ETHA.

The July 6 print pushed IBIT back into positive territory, a shift from the redemptions Wintermute had cited through the prior sessions. Bitcoin ETFs are coming off a record eighth straight negative week, a run that held despite a large single-day inflow the prior Thursday.

Bitfinex sees a failed breakdown

Bitfinex analysts offered a more constructive technical read, arguing that June's forced selling is fading.

Bitcoin closed the month down 20.5%, its worst June since 2022 and second-worst since 2013, after falling to $57,803, according to the firm. Bitcoin's recovery above $60,000 within four trading sessions suggests the slide under the prior $58,000 floor was a failed breakdown rather than a sustained leg lower, Bitfinex said.

The rebound began before the softer employment data lifted risk sentiment, a sign spot buyers had returned at marginal lows. "The sequence matters: spot demand emerged at a fresh marginal low before the macro-driven rally," the analysts wrote.

Seasonality points to a firmer July, which has averaged a 7.6% gain with a median of 8.2% since 2013, but that alone will not sustain the move, Bitfinex cautioned. Renewed ETF inflows, particularly into IBIT, remain the clearest signal that institutional demand has returned.

The firm read the composition of early-July inflows as unconvincing. Continued IBIT redemptions indicated the print reflected a temporary broadening across smaller funds rather than a return of the marginal institutional buyer, and until IBIT flips back to sustained inflows, the structural bid remains unproven, Bitfinex said.

Half of supply sits underwater

A longer-horizon signal cuts the other way. More than 50% of the circulating bitcoin supply still trades at a loss, a level first crossed on June 5, according to research firm K33.

Bitcoin has traded above Tuesday's price on only about 12% of its trading days since 2010, yet more than half of all coins are held at a loss, the firm said, a reflection of how much supply changed hands near the cycle highs.

This threshold has typically marked opportune entry points in the past. In the four prior instances since 2011 when more than 50% of supply fell into loss, one-year forward returns ran to 359%, 69%, and 93% in three cases, with a 25% loss in the fourth, K33 said. The cycle bottom arrived between 10 and 101 days after the crossover in each case.

Bitcoin had also drifted back toward its 200-week moving average, sitting about 4.3% below it as of June 5, K33 said. Proximity to that level marked the bottom in 2015, 2018, and 2020, though prices stayed beneath it for more than a year in 2022.

The firm tied June's weakness to a change in the marginal seller. Where long-term holders drove distribution through 2024 and 2025, the 2026 selling has come from relatively freshly acquired coins sold at a loss rather than old supply taking profit, K33 said.

Equities, rates and positioning

Kyle Rodda, senior financial market analyst at Capital.com, tied the broader tone to a bounce in U.S. technology stocks that pulled Wall Street higher, with a rotation underway from the AI trade into cyclical names.

Monday's ISM services data showed a softer prices subindex, a forward-looking signal for cooling inflation, he said.

The odds of a U.S. rate hike before year-end sit around 76%, with the chance of a move this month near 25%, according to Rodda.

Meanwhile, the Coinbase Bitcoin Premium Index has stayed negative for 50 consecutive days since May 19, the longest streak since the indicator launched, with the latest reading at -0.0742%, according to CoinGlass. The prior record was a 40-day run from January 16 to February 24.

Prolonged negative premiums often signal weaker U.S. institutional demand or short-term market pressure. The Coinbase premium sits negative for a 50th day, per CoinGlass.

Bernstein is holding its year-end bitcoin target of $150,000 despite a drawdown of about 54% from the cycle high. CryptoQuant, meanwhile, reported that bitcoin and altcoin exchange deposits have spiked, pointing to higher volatility ahead.

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