Bitcoin’s recent rally seems to be losing steam, according to Matrixport, which anticipates a consolidation phase extending through August following the conclusion of “Crypto Week.”
In a report shared on social media on July 25, Matrixport highlighted that Bitcoin had hit a technical ceiling at $122,000 after a breakout earlier in the month that lacked sustained leverage support.
Despite an increase in retail activity during the U.S. “Crypto Week,” analysts noted limited follow-through. The firm described the market as “poised to cool” in its previous note from July 18, which preceded a weekly decline of 0.6%.
While open interest in Ethereum futures saw a significant rise from $14 billion to $25 billion, funding rates remained relatively stable. Matrixport expects these rates to adjust lower in the coming weeks, leading to position unwinding.
The report also mentioned a growing profit-taking pressure from early holders and a shift towards risk reduction as the market transitions into a slower summer cycle. Confidence among long-position holders now depends on sustained upward price action, as leveraged trades may be unwound in the absence of such movement.
As the industry enters a “quieter summer,” the anticipated Bitcoin reserve strategy report from the White House has been delayed to July 30. Matrixport does not anticipate any major policy shifts from the report, with attention turning to the GENIUS Act, which focuses on stablecoin-backed Treasury demand.
The firm believes the market is currently overbought and foresees limited upside potential without fresh catalysts. Increased market complexity is leading to a greater reliance on technical overlays and macro signals in digital asset trading strategies, with positioning decisions becoming more sensitive to broader monetary dynamics.
With the GENIUS Act linking stablecoin issuance to U.S. Treasuries, short-term rate expectations are expected to play a larger role in shaping digital asset flows in the future.
In conclusion, Matrixport flags a period of summer consolidation following the surge during Crypto Week, highlighting the need for careful positioning and a nuanced understanding of market dynamics in the current environment.