Bitcoin rises above $66K as K33 flags possible summer slowdown

Bitcoin (BTC) rose above $66,000 on Tuesday, continuing its slow recovery in July, which aligns with a historically quiet period for trading activity.

In a report on Tuesday, K33 analysts described the current market conditions as consistent with Bitcoin's typical summer slowdown, noting that July has historically been the weakest month for BTC trading volumes relative to the annual average.

Bitcoin ETF flows stabilize after months of outflows

K33 identified the stabilization in Bitcoin exchange-traded fund (ETF) flows as one of the more encouraging developments in the current market environment.

The change is particularly visible in the proportion of trading days that recorded net outflows. In May, 70% of Bitcoin ETF trading days ended with net outflows, rising to 90% in June. So far in July, only 33% of trading days have recorded net outflows.

The report stated that the shift suggests modest demand has replaced the persistent selling pressure seen throughout May and June.

“While ETF activity has become notably more passive, the balance of flows has shifted in BTC's favor, suggesting that modest demand has replaced the persistent rotation out of the asset seen throughout May and June,” K33 wrote.

Over the past week, Bitcoin ETPs recorded net inflows of 778 BTC, taking July's total net inflows to 1,842 BTC.

Spot market activity remains near yearly lows

Despite the improvement in ETP flows, broader Bitcoin market activity remains weak. K33 stated that average daily Bitcoin spot trading volume reached $2.3 billion over the past seven days, up just 3% from the previous week and remaining near yearly lows.

The firm added that Bitcoin's 30-day trading volume was only 62.4% of the annual average as of July 19. Historical data from 2020 through 2025 shows that trading activity typically bottoms around July 24 when volumes averaged 72.1% of the annual average.

"Low volatility tends to pacify the market, resulting in lower participation, which in turn reinforces the low-volatility environment. This is a classic summer pattern in crypto, and it is once again showing signs of repeating," K33 shared.

Bitcoin derivatives remain subdued amid weak participation

The muted activity is also visible in Bitcoin's derivatives markets. On the Chicago Mercantile Exchange (CME), the annualized one-month futures basis has risen to between 5% and 7%, compared with 2% to 5% between mid-May and late June.

However, CME open interest has remained below 100,000 BTC throughout July, reaching its lowest level since October 2023. K33 attributed the subdued activity partly to weaker demand for macro hedging and a lack of speculative interest amid weak momentum.

Bitcoin perpetual futures show a similar picture. Open interest has remained largely stable over the past three weeks, while annualized funding rates have recovered to around 6%-7% after turning negative in June.

The report stated that the lack of growth in positioning suggests a low risk of either long or short squeezes. With activity across spot and derivatives markets remaining subdued, K33 expects macroeconomic developments to become the main catalysts for Bitcoin as July progresses.

The firm signaled that investors will be watching upcoming interest rate decisions from the European Central Bank (ECB) and the US Federal Reserve (Fed), with the July 29 Federal Open Market Committee (FOMC) meeting expected to be the key event.

At the same time, the ongoing conflict between the US and Iran remains an additional source of uncertainty for broader risk sentiment.

Bitcoin trades at $66,500, up 2.1% over the past 24 hours at the time of writing.