Summary
- Bitcoin's signals are in open conflict. A narrowing Coinbase discount and a rare weekly RSI bullish divergence argue a bottom, but spot demand is negative and institutional buying has flatlined.
- Crypto is squeezed from both sides. The Middle East dual chokepoint crisis has pushed crude back above $90, while the 30 year Treasury yield above 5% keeps capital costs elevated and caps risk asset valuations.
- The Jul 28 to 29 FOMC is the one to watch. Hike odds jumped from 11% to 33.7% on the oil spike; with a hold still the base case, the focus is how the Fed reads oil's pass-through to inflation.
Is This BTC's Bottom? The Data Is Conflicted
Momentum and US flows suggest a bottom is forming, but the spot and institutional buying that would confirm it has not shown up. Five charts below break down the conflict and where the market stands now.
Bullish 1: US sell pressure is fading
The Coinbase premium proxies US demand. Active US buying pushes BTC to a premium over other exchanges, weak demand pushes it to a discount.
The discount has narrowed from -0.11% to -0.04%. US sell pressure is clearly easing and the market is gradually warming back up.
Bullish 2: third weekly RSI bullish divergence on record
Price made a lower low while weekly RSI made a higher low, signaling downside momentum is exhausting.
This has happened only twice before, at the March 2020 pandemic low and the late 2022 FTX low, and both marked cycle bottoms. The third just fired. Two prior cases are too few to be statistically conclusive, but both called the exact bottom.
Bearish 1: spot demand keeps weakening
Spot demand remains firmly negative while futures demand, though positive, runs well below the rebound three months ago.
The bounce is being carried by leverage, not spot accumulation, and leverage driven rallies are historically fragile.
Bearish 2: institutional demand has flatlined
All three institutional channels are stalled at once. ETFs show a -$2.1B 30 day change, Strategy has been flat at zero for weeks, and treasury companies that bought roughly $6.6B in August 2025 near $115K are now contributing virtually nothing near $65K.
Historically, when this cohort's demand bottoms, positioning has tended to make the most sense.
Current state: short-term holders are still underwater
Short-term holders have been realizing losses for about nine months, typical bear market behavior.
Their cost basis sits near $68,800, so with BTC holding above $65,000 they are realizing around 4% losses.
Reclaiming $68,800 would flip recent buyers back into profit, the shift that typically restores short-term confidence. The market badly needs it.
Crypto Faces Energy Shock and Long Bond Pressure
The crypto market is currently caught between two forces. On one side is an energy supply shock coming out of the Middle East. On the other is a funding squeeze showing up in long-dated Treasury yields. Together they raise the discount rate on all risk assets, and crypto is no exception.
1. The energy shock has escalated from one chokepoint to two.
Shipping through both the Strait of Hormuz and the Red Sea is now severely disrupted. Diplomatic positions on both sides of the US-Iran standoff remain firm, and no negotiation path is currently visible. Crude oil futures (CME) have climbed back above $90.
This is no longer a short-term supply and demand story: shipping and insurance costs are rising structurally, and markets are pricing a persistent energy security premium into assets.
2. Central banks are now moving out of sync.
The oil rebound is hitting each major central bank differently:
- The ECB held rates steady on Thursday after hiking in June, but the energy rebound keeps a September move on the table
- The BoJ is open to faster hikes, pressured by a weak yen and imported inflation
- The Fed sits in between: June CPI cooled, easing pressure for an immediate hike, but with Warsh having scrapped forward guidance, policy visibility is low. Fed funds futures now price a 56.9% probability of a 25bp hike at the September meeting, up from 51.2% a week ago
The market is no longer trading "hike this month or not." It is trading whether the energy shock keeps inflation pinned at elevated levels.
3. The long end of the Treasury market is the deeper warning.
The 30 year yield has held above 5%, rare territory in the past two decades.
Three pressures sit behind it: fiscal deficits, AI infrastructure financing, and inflation risk. Foreign demand is fading and domestic money prefers short duration, so the government faces higher funding costs.
If yields reach 5.25%, two things follow:
- Equity valuations compress, because a higher risk-free rate directly lowers the multiple investors will pay for future earnings, hitting long duration tech names hardest.
- Financial stability strains emerge, as banks and insurers sit on deeper mark-to-market losses on their bond holdings while refinancing costs rise across the economy.
4. AI capex is quietly competing for the same money.
Google raised 2026 capex guidance to $195 to 205 billion, OpenAI lifted its 2030 cloud spending estimate to $700 billion, and AMD signed a multibillion dollar chip and investment deal with Anthropic.
Big Tech will be issuing long-term debt for years, competing directly with the Treasury for long duration capital. Government deficits plus AI buildout are absorbing global savings at the same time, which keeps long rates sticky.
5. Tariffs add a further inflation wildcard.
The Trump administration is preparing a new round of Section 301 tariffs on dozens of economies while granting generic drugs a two year tariff exemption.
If oil stays high, gasoline moves back above $4 per gallon, and tariff costs stack on top, inflation could prove more persistent than markets expect, with direct political stakes ahead of the November midterms.
What it means for crypto
The crypto market is facing energy supply risk and funding supply constraints at the same time. The former pushes up inflation and transport costs, while the latter lifts the global cost of capital through long-dated Treasury yields and AI financing demand. This combination makes valuation expansion for risk assets harder, and capital will lean toward short duration assets and names with defensive cash flows.
Once a new normal above 5% on the 30 year yield is accepted by the market, the discount rate on global assets resets higher, and BTC will need either a liquidity turn or a crypto native catalyst to break out of the current range rather than macro alone.
Week Ahead
- Jul 29: FOMC Rate Decision
- Jul 30: June PCE; Bank of England Rate Decision
- Jul 31: Bank of Japan Rate Decision
- Ongoing: Middle East conflict and its impact on oil prices
Next week's FOMC decision is the anchor. A week ago markets priced just an 11% probability of a hike, but with the Middle East conflict escalating sharply and crude futures back above $90, that probability has surged 22 points to 33.7%.
The most likely outcome is still a hold, so the focus shifts to how the Fed and Warsh judge the pass-through from oil to inflation. With the conflict intensifying, the question for all major central banks is whether they see oil staying elevated, and whether that risks broadening into a full inflation impulse.
Disclaimer: The information provided herein does not constitute investment advice, financial advice, trading advice, or any other sort of advice, and should not be treated as such. All content set out above is for informational purposes only.