After recovering from a 21-month low of about $58,200 set in late June, Bitcoin prices started the week of July 13 trading in the low-$64,000s. But it's still around 50% down from October's high of $126,000.
The market's inability to break out of its range and avoid a total collapse is not indicative of a lack of resolve.
This is the culmination of four separate factors that all came together on the same day: the conclusion of predictive statements by a central bank, the failure of a cryptocurrency regulatory proposal to meet its significant deadline, the ongoing conflict surrounding a vital global oil passage, and the recent stabilization of an exchange-traded fund flow pattern.
Unfortunately, this week's four outcomes are all murky. There is now a connection between all four.
The US CPI Print is the Fulcrum
Everything else happening this week is setting the stage for Tuesday, July 14, when the June Consumer Price Index is released by the Bureau of Labor Statistics.
The experts at Bitfinex have said it how it is: "The CPI data for June, set to be released on July 14, will serve as the crucial turning point."
That's no exaggeration; it's the last major piece of information before the Federal Open Market Committee meeting on July 28–29, and the central bank meeting that week is not the same one that markets got used to under Jerome Powell.
Upon taking office on June 17, new chair Kevin Warsh promptly deleted any reference to the future from the meeting's post-decision statement, chose not to provide his own dot, and suggested that the dot-plot method should be reviewed by the institution.
In 2026, nine out of the eighteen FOMC members expect a rate rise, and six of those members expect two raises. Also, from 3.4% in March, the median rate prediction for the end of the year has increased to 3.8%. After initially expecting one or two decreases this year, the futures markets have now put the probability of at least one increase before the end of 2026 at 66%.
Informing central bankers that "inflation risks have come down," Warsh moderated his attitude at the ECB's Sintra session on July 1, briefly restoring Bitcoin's price over $60,000.
But it was obvious that he didn't want to shed any light on the decision-making process scheduled for July 28-29.
As an added bonus, the committee's more assertive members have solid evidence in May's core PCE reading of 3.4%, the highest since April 2023.
Three straight rises in September, October, and December are what BofA has suggested as a possible outcome.
The current cautious tone from the Fed and the ETF flow reversal stated below were caused by June payrolls, which showed 57,000 jobs gained instead of the projected 115,000. A moderate June CPI reading reinforces this.
Advocates for stricter monetary policy have been awaiting a strong report – anything that brings core inflation back to May's 4.1% headline rate – since mid-June.
However, this news would also challenge the final narrative supporting Bitcoin's comeback in July.
The market will have another chance to react to the implications of the CPI statistic on July 15 when Warsh is scheduled to testify.
ETF Flows Just Flipped, But the Picture is Fragile
US spot Bitcoin ETFs had net outflows for eight weeks running up until early July, which was the longest run ever for this product category, amounting to around $8.2 billion, before a trend reversal that is still in its early stages.
The highest single day since May 5 was July 2, when inflows totaled $221.7 million.
The slightly unpredictable trend continued throughout the second week of July, with net inflows of $90.4 million recorded on July 10. An eight-week outflow was largely ended by BlackRock's IBIT, which provided $86.8 million and was the primary driver of the spike.
More important than the title is the structure.
Although smaller funds like Fidelity's FBTC and Ark's ARKB saw positive movement, the outflow trend started with the largest fund in the complex, IBIT, which has assets under management ranging from $37 billion to $45 billion, depending on the session.
The outflow trend lasted for 11 days straight into early July.
According to HashKey and LVRG experts, the first turnaround was more of a "careful re-entry" than a change in trend.
It appears that flow activity is a key component of the market structure, as research on the ETF formation and redemption process currently shows that it accounts for over 45% of the weekly changes in Bitcoin price.
This suggests that it is more than just a reflection of mood.
The significance of an unvalidated increasing trend in IBIT is far greater than that of a single day's result.
For the eighth week in a row, net outflows have been recorded by Ethereum ETFs leading up to early July.
Be sure to keep an eye on Ethereum's recent outperformance of Bitcoin, especially considering that Tom Lee's BitMine has added 40,000 ETH (worth $71.6 million) to its holdings, bringing them close to 5% of the entire ETH supply.
If risk sentiment turns negative again this week, it will be instructive to observe whether this pattern persists.
The Hormuz Conflict: Standing Volatility Input, Not a One-Off Shock
At the beginning of July, the geopolitical dynamics involving cryptocurrencies had a major influence.
After being formally established through a memorandum on June 17, a fragile accord quickly fell apart in the span of three weeks. The Iranian navy attacked the Saudi supertanker Wedyan and the Qatari LNG transport Al Rekayat in the Strait of Hormuz on July 7. More than 60 IRGC warships were among more than 80 targets struck by the United States in a single strike near Bandar Abbas and Konarak.
Also, the restrictions that had been lifted on oil shipments from Iran were reimposed. In retaliation, Tehran attacked US sites in Bahrain and Kuwait; the Iranian health ministry has verified at least fourteen deaths associated with the trade.
After the news broke, Bitcoin's price plummeted to around $61,700, falling more than 2% in a single session and no longer serving as a hedge against the market. Amidst the broader market escalation, the CoinDesk 20 fell about 2.9%.
It is crucial to keep an eye on the return of Brent crude to $76 as it relates to CPI. Current inflation targets for the Federal Reserve are very sensitive to the sustainability of oil price gains.
This highlights the fact that any increase in the Hormuz and a high CPI figure are linked dangers, reinforcing the same story about interest rate rises that is affecting Bitcoin's value.
What Actually Moves The Week
United States-Inflation (Tue): Concerns that the central bank may raise interest rates this year should be allayed by this.
There was no clear winner among Federal Reserve officials when it came to their June predictions for possible rate rises, although the consumer price index is likely to fall month-over-month due to steep drops in gasoline costs.
World Cup-related price spikes, especially in the lodging, transportation, and food service industries, could lead to higher core inflation.
Starting in the fall, BRN expects housing rents to fall, wage growth to be moderate, and tariffs to have less of an impact, all of which will help alleviate concerns about inflation. For that reason, BRN expects the Fed to keep interest rates unchanged for the foreseeable future.
Canada-Rate decision (Wed): The Bank of Canada appears poised to maintain rates at 2.25%, influenced by a combination of mixed employment figures, muted business surveys, trade-related uncertainties, and relatively mild inflationary pressures.
BRN's outlook suggests that the central bank will maintain its current stance well into 2027.
United States-Retail sales (Thu): These will be impacted by declining gasoline prices, which will reduce sales value; however, the control group is expected to perform well.
Consumer confidence is likely to see a rebound as the significant drop in gasoline prices alleviates the pressure on spending capacity.
Four Important Dates
July 13, when the Senate returns with a bill approaching its deadline; July 14, the release of June CPI, seen as a critical moment for Federal Reserve pricing; July 15, when Warsh delivers testimony; and finally, July 28–29, the FOMC's decision-making timeframe.
Amidst all these factors, a conflict arises at the most inconvenient moments for those trying to build a narrative around risk assets.
This is further complicated by a recent shift in ETF flows that feels too recent to distinguish from simple background noise.
The established range - approximately $58,000 to $64,000 on the lower end, with $67,250 (June's local peak) and the 200-day SMA around $74,000 as the levels that need to be reclaimed by the bulls - remains intact until one of the four scheduled inputs disrupts it.
This week, there seems to be a disconnect with the prevailing sentiment. It depends on a CPI report, a closure tally, and the developments in the Strait of Hormuz by Friday.
