Late-night shock! In the crypto market, BTC has suffered a continuous three-quarter “halving” of 50% under the Fed’s hawkish grip—where is BTC’s last line of defense?

Over the past three months, the crypto market has gone through the most brutal wave of sell-off since 2022. Don’t call it a “correction.” Three straight quarters of sustained fund outflows is already a systemic clearing.

Total market cap has shrunk by $304.8 billion, down 12.6%, leaving $2.1 trillion. Compared with the all-time high of $4.27 trillion in October 2025, it has already crashed more than 52%, back to the level of September 2024. Average daily trading volume is $93.1 billion, down 20.9% year over year. The perpetual contract trading volume of top compliant exchanges is down 10%, to only $21k; spot trading volume is down 27.9%, to just $42.7k. Even the stablecoin sector, which had previously been the steadiest, has seen its first scale contraction in more than three years—market cap fell 1.6%, to $305.1 billion.

Behind the core metrics lies only one conclusion: funds are withdrawing from the crypto market, not rotating within it.

More painful, though, are the structural shocks. By the end of June, $BTC fell to around $58,500, hitting a new low since 2024, with a quarterly drop of 14.2%. $ETH was worse: it plunged 25.4% in the quarter, with a low of $1,625. In Q2, Bitcoin and U.S. stocks weakened in sync, but it wasn’t just passive trailing—the price action even replaced risk stocks; when the S&P 500 rebounded, Bitcoin and related risk assets kept lagging. The “correlated trading logic” that dominated from 2024 to 2025 has already broken down—Bitcoin used to be viewed as a risk-on asset with a high sync to the Nasdaq, but now they are fully decoupled.

There are three culprits behind it: continued redemptions from spot ETFs, tighter monetary policy from the Federal Reserve, and large-scale Bitcoin selling by corporate treasury/wealth management firm Strategy. Strategy’s prior steady accumulation of coins was an important pillar for market upside expectations, but now it is accelerating deleveraging.

ETF fund flows have completely reversed. In April, U.S. spot Bitcoin ETFs pulled in $2.02 billion, but in the following months they faced large-scale redemptions, with net outflows of about $4.67 billion in Q2. In June alone, outflows were nearly $4.5 billion, the worst monthly performance on record. This isn’t sentiment volatility—ETF subscription/redemption directly maps to real buying and selling. Ongoing redemptions mean Bitcoin spot is continuously being sent to exchanges to be sold.

Citigroup was once one of the institutions most bullish on crypto assets on Wall Street in 2025. On July 1, it also cut its 12-month Bitcoin target price from $112,000 to $82,000.

However, some early signals suggest the current cycle of outflows may be nearing its end. Santiment shows that since May 6, cumulative ETF outflow funds have exceeded $8.5 billion. Historical patterns indicate that withdrawals of this scale usually correspond to a low-level selling phase, not the start of a new round of deep declines. Glassnode shows that despite continued institutional outflows, $BTC long-term holders resumed coin accumulation in early July—when retail and institutions take different actions, it often becomes more obvious near the bottom of a cycle than in the middle of a crash.

In early July, ETF funds briefly flipped back, recording a net inflow of $46.6 million. Then BlackRock’s IBIT fund attracted $510 million over three days. But this rebound couldn’t last—funds turned back to outflows again. On July 8, the single-day net outflow was about $85 million.

For the first three weeks of July, $BTC traded sideways in a range of $56,000–$64,000. It tested the $63,700–$64,000 resistance zone multiple times, each time failing and falling back under pressure.

Now all eyes in the market are on the Federal Reserve. In the June FOMC meeting, the interest rate was kept in the 3.5%–3.75% range, the first rate decision meeting chaired by Kevin Wou after he took over. The benchmark rate has been unchanged since December 2025. But multiple Federal Reserve officials released signals suggesting there could be rate hikes within the year—Wou himself did not give a clear forecast. This stance is far more hawkish than the market expected, which explains why interest-free assets like Bitcoin struggle to sustain upside.

Nearly all trading desks currently view the FOMC meeting on July 28–29 as the most important event of Q3. Two scenarios: if the Fed is more dovish, $BTC could hold in the $68,000–$84,000 range, and the return of ETF funds would have a foundation; if the Fed is more hawkish, then $50,000–$56,000 will become the new consolidation center.

Beyond that, corporate Bitcoin reserve holdings form a tail risk. The June sell-off was initially marketed as an exclusive operation aimed at capturing dividends. But if other corporate wealth management entities are pressured by their balance sheets and imitate the practice of selling Bitcoin, the entire industry could lose institutional funding support.

On regulation, from 2025 to the beginning of 2026, the industry pushed hard for the 《CLARITY Act》. It would have the CFTC regulate digital asset spot commodity-type instruments, while the SEC regulates digital asset securities. The House passed it in July 2025 with 294 votes in favor and 134 against. In May 2026, the Senate Banking Committee passed it 15:9. After that, the legislative process stalled. In February, the market estimated the bill’s probability of being implemented within 2026 at about 82%, but by mid-July it fell back to 40%–45%. The Senate was originally scheduled to discuss it on June 1, but it did not proceed as expected.

Controversial points include: President Trump’s crypto asset holdings and disclosure obligations, Section 604 of the bill’s protective provisions for developers, and stablecoin yield rules. To reach 60 votes in the Senate and end the long debate, backers would need support from seven Democratic lawmakers, but within the Democratic caucus only two have publicly stated support. Stifel and Beacon Policy Advisors analysts warned: if there is still no progress in July, substantive推进 of the bill could be delayed to 2027.

The ambiguity in regulatory rules raises the risk premium for all crypto products— even the most conservative projects cannot escape. This uncertainty continues to affect token issuance, asset custody, and exchange registration. The result is that funds are no longer broadly deployed, but instead concentrate toward a small number of companies that can generate stable profits.

There are few highlights, but they do have real growth. The forecast market’s nominal trading volume is expected to rise 48.7% year over year to $113.8 billion. In June alone, trading volume is close to $50 billion to $53 billion, setting a record high. Kalshi holds 58.9% of market share, with about 80%–87% coming from sports derivatives contracts. The sector is growing rapidly, but it is highly constrained by legal and policy conditions. On June 10, the CFTC issued a new rules proposal, opening a 45-day public comment period: keep most sports trading markets, while banning contracts involving players’ injuries, referee decisions, and so on. Multiple state governments and prediction markets have fallen into legal disputes; Arizona has already filed a formal lawsuit, and the disagreement may ultimately be submitted to the U.S. Supreme Court.

Tokenized collectible trading volume jumped 143% quarter over quarter to a total of $127k in Q2. Collector Crypt is especially striking: June trading volume surged 317% to $406 million, more than 12 times the同期 OpenSea NFT trading volume.

Tokenization of real-world assets (RWA) continues to develop steadily. The on-chain total value of tokenized assets issued by 177 issuers is about $28.1 billion. Growth in this sector is driven by a base of income-generating physical collateral assets, independent of the crypto market’s risk-cycle ups and downs.

The key factor determining the direction of Q3 remains the FOMC decision on July 28–29. It is currently unclear whether the Senate can pass the 《CLARITY Act》 before the August recess. Supporters expect a revised version to be released around July 20, but the main obstacle is clear: they are short by 7 Democratic votes. Wall Street consensus has shifted from “more likely” to “too close to call.”

Based on all indicators, the market currently lacks the foundation for an extreme sell-off. While the “making money” effect has weakened significantly—average fees across major mainstream chain ecosystems in June fell 44.6%—the $BTC price remains close to the 200-week moving average, and the long-term support structure has not been broken. The market’s trading logic has changed: participants no longer rely purely on narrative-driven hype, and trading decisions focus more on price action, policy choices, and interest-rate expectations. A broad rally driven by optimistic sentiment alone is unlikely to happen.

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