The Hidden Risk behind Bitcoin’s Summer Setup｜Matrixport Research

Bitcoin’s momentum is fading just as cracks start to appear in the U.S. macro backdrop. Two key economic indicators just hit their lowest levels in months — yet most investors are still focused on ETF flows. Under the surface, funding dynamics, stablecoin activity, and forward-looking data suggest a bigger shift may be underway. Could this be the start of a summer consolidation — or something more serious? Our models are issuing early warnings, but the market hasn’t yet priced them in.

After maintaining a bullish stance for the past two months, we advised traders to book profits in last week’s report. Early signs of consolidation are now emerging. Bitcoin has pulled back by 3%, Ethereum by 4%, and Solana by 11%, confirming a shift in momentum. Looking ahead, we may be entering a period of uncertainty, as U.S. macroeconomic data begins to soften. The recent strength in demand likely reflected a temporary surge in front-loaded orders ahead of Trump’s anticipated tariffs — activity that now appears poised to normalize.

More relevant to the broader U.S. economy is the ISM Non-Manufacturing PMI (services), as services account for approximately 80% of the country’s GDP. While economists had expected a rebound from last month’s reading, the index surprised to the downside, falling to its lowest level since July 2024 and indicating a mild contraction. Taken together, the weakness in both the manufacturing and services (non-manufacturing) PMIs signals that economic data is not only falling short of Wall Street expectations but also slipping deeper into contraction territory. This could be just the beginning of a broader trend of softening data.

From a macroeconomic perspective, two key indicators to watch are oil prices and the U.S. dollar. A decline in oil would signal broader economic weakness, while continued softness in the dollar could gradually prime markets for future rate cuts. However, with bond yields still range-bound, the market may have to adjust to the reality that the Fed is likely to remain on hold longer than expected. Policymakers may fear that tariffs could re-ignite inflationary pressures, making them hesitant to ease policy prematurely.

This time, however, there is an added layer of risk: economic data may deteriorate significantly due to the ripple effects of tariff policy, creating confusion and hesitation among investors. With early signs of weakening data already emerging, we could be heading into two months of economic turbulence. In such an environment, it’s unlikely that Bitcoin will continue to rally uninterrupted, especially with the Fed unlikely to step in with rate cuts while inflation expectations remain elevated.

Disclaimer: The above content is for informational purposes and reference only. The content does not constitute investment advice. Digital asset transactions can be precarious and volatile. Investment decisions should be made after carefully considering individual circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.

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