Deleveraged Bitcoin holds 7.5% July gain, faces choppy August

Bitcoin is poised to close July up roughly 7.5%, a notable performance given a barrage of severe macro headwinds. The largest cryptocurrency slipped below $63,000 on Friday, down about 3% on the day, but successfully consolidated well above its bear market lows. It achieved this even as climbing bond yields and a sharp unwind in the AI trade cooled risk appetite across broader markets.

This resilience relative to equities stems largely from depleted leverage within the crypto system. Derivatives traders were heavily flushed out during a late June selloff that pushed Bitcoin below $58,000 on July 1. Without this leveraged exposure, the asset class was insulated from the cascading margin calls seen elsewhere.

Average daily liquidations have since stayed well below the typical $400 million to $500 million range seen earlier this year. "Crypto fell less than levered equity themes because the forced-selling fuel was already spent," Bitfinex analysts noted.

Operational risks remain a lingering concern for the sector. A recent high-profile exploit involving Coldcard hardware wallets resulted in at least $38 million worth of bitcoin being stolen.

While the incident has not yet materially moved prices, the fallout could still impact valuations. "The proceeds haven't yet been liquidated, but the knock-on effect of this and the likelihood of liquidation will weigh on bitcoin pricing in the near term," said Paul Howard, director at trading firm Wincent. He noted that the exploit broadly highlights the operational risks that continue to accompany self-custody.

Looking ahead, macro uncertainty is the dominant theme for institutional investors. STS Digital managing partner Jeff Anderson noted that shifting expectations around rate cuts, pauses, and potential hikes are pushing markets into a new volatility regime. That dynamic is expected to keep pressure on high-beta assets until the economic outlook becomes clearer.

The immediate focus is next week's U.S. jobs report, which will help clarify the Federal Reserve's trajectory. According to Bitfinex, the critical variable for bitcoin is no longer liquidations, but whether spot bitcoin ETF inflows will resume.

Lacie Zhang, research analyst at Bitget Wallet, expects a muted month ahead as a result. "Base case is a choppy August with bitcoin range-bound unless real yields fall or ETF flows turn consistently positive again," she said. "The market can absorb a neutral Fed, but not a stronger dollar, higher real yields, and weak ETF demand all at once."