Bitcoin News Digest July 4, 2025

Happy Independence Day!

Yesterday morning just after the US markets opened, Bitcoin experienced a rally, briefly touching $110,541, just below its June 9th lower high. However, this upward momentum was abruptly halted and reversed on the heels of the release of a stronger-than-expected U.S. nonfarm payrolls (NFP) report. This robust jobs data significantly reduced the probability of an imminent interest rate cut by the U.S. Federal Reserve, with market odds shifting firmly towards September at the earliest. A "higher-for-longer" interest rate environment tends to make risk-free assets more attractive and strengthens the U.S. dollar, both of which serve as headwinds for Bitcoin. Consequently, Bitcoin retreated from its highs and is consolidating in a tight range, generally between $108,000 and $110,000.

Technically, the $110,500 level has now been established as a formidable psychological and technical resistance zone, reinforced by these macroeconomic pressures. Adding to the cautious short-term outlook, technical analysis reveals several warning signs:

• Bearish divergences have emerged across multiple timeframes (15-minute, 1-hour, and 4-hour charts), indicating waning underlying strength in rallies.

• A more significant bearish divergence that formed on the one-day chart when Bitcoin reached its all-time high around $111,800 in May remains intact, suggesting persistent bearish pressure.

• These technical signals increase the risk of a "bull trap" or "fakeout".

• Key support level to watch is the descending trendline from lower highs (currently near $108,400) with a break below this area potentially signaling additional correction.

Analyst outlooks for the remainder of the year are divided. Some analysts, like Rekt Capital, caution that based on historical halving cycle patterns, the current bull market could be entering its final phase, potentially peaking around October 2025. Conversely, a growing number of analysts from firms like Bitwise and Standard Chartered believe that the old cycle dynamics are less reliable due to the advent of spot Bitcoin ETFs and institutional adoption. They point to bullish factors such as seasonal tailwinds and capital rotation, projecting a potential surge to a new all-time high, with some price targets reaching as high as $136,000. This split reflects the "pressure cooker" environment where the structural bullish force of the supply shock is suppressed by a hawkish macroeconomic environment.

The Great Unseen Accumulation: Institutional Impact and Supply Squeeze

Beneath the surface of price fluctuations, a profound transformation is occurring in Bitcoin's market structure. Despite traditional on-chain metrics appearing subdued (e.g., daily confirmed transactions down 33.76% year-over-year, daily active addresses stagnant at 850,000), institutional demand is quietly creating one of the most significant supply squeezes in Bitcoin's history.

This phenomenon has been termed "The New Bitcoin" by CryptoQuant, emphasizing that the primary driver of demand has shifted from broad retail users to concentrated institutional entities like ETF issuers. For instance, BlackRock's IBIT, the largest spot Bitcoin ETF, executes only about 24 on-chain transactions per week on average, yet these few transactions move over 6,400 BTC into its custody, masking the true scale of demand.

This shift has led to a "supply shock":

• The percentage of Bitcoin's total circulating supply held on cryptocurrency exchanges has fallen below 15% for the first time since 2018, recently hitting a seven-year low of 14.5%.

• The balance of Bitcoin held on Over-the-Counter (OTC) desks, which facilitate large institutional trades, has also plunged to all-time lows.

• These trends are attributed to relentless and sustained institutional buying, primarily through U.S. spot Bitcoin ETFs, which recently saw over $4.7 billion in net positive inflows over a 15-day period.

• The Bitcoin purchased by these institutions is largely being moved off exchanges into secure, long-term cold storage, indicating high-conviction, long-term holding.

This fundamental structural evolution means the network's velocity is slowing down as coin supply moves into deep storage, anchoring the price increasingly by deliberate institutional capital allocation rather than fast, sentiment-driven retail reactions. For sophisticated investors, the focus for gauging network health and conviction should shift from daily active addresses or transaction counts to metrics tracking the institutional footprint and supply dynamics, such as total supply on exchanges and ETF flows.

Washington Convergence: Regulatory Breakthroughs on the Horizon

The United States is on the cusp of a historic legislative breakthrough, signaling a decisive shift from regulatory ambiguity to proactive legislative action. This coordinated legislative push aims to establish the U.S. as a global leader in digital asset innovation and address the primary barriers to mainstream adoption: market structure uncertainty and tax complexity.

Key developments include:

• "Crypto Week" in mid-July: U.S. House of Representatives Republican leaders have announced a dedicated "Crypto Week" to advance three landmark pieces of legislation. This initiative is framed as a key part of delivering "the full scope of President Trump's digital assets and cryptocurrency agenda".

  • The GENIUS Act (Stablecoin Bill): Provides a clear regulatory framework for payment stablecoins, aiming to bolster financial innovation and consumer protection. It has already passed the Senate with bipartisan support.

  • The CLARITY Act (Crypto Market Structure Bill): Arguably the most crucial, it seeks to resolve the long-standing jurisdictional dispute between the SEC and CFTC. It would define digital assets, designate most as commodities regulated by the CFTC, and establish rules for exchange registration and customer asset segregation. This bill has cleared House committees with bipartisan support.

  • The Anti-CBDC Surveillance State Act: Aims to prohibit the Federal Reserve from issuing a retail central bank digital currency (CBDC), reflecting a commitment to preserving financial privacy.

• Senator Lummis's Comprehensive Digital Asset Tax Bill: Complementing the House's focus, Senator Cynthia Lummis has introduced a standalone bill to fundamentally reform digital asset taxation, addressing pain points for individual users, miners, stakers, and traders.

  • De Minimis Exemption: Proposes a capital gains tax exemption for personal transactions with digital assets where the gain is under $300, subject to an annual cap of $5,000. This would eliminate onerous reporting for everyday purchases, fostering Bitcoin's utility as a medium of exchange.

  • Ending "Double Taxation" for Mining and Staking: Income from mining and staking would not be recognized until assets are sold or disposed of, aligning tax treatment with economic benefit.

  • Parity with Traditional Financial Assets: Applies established financial rules like the 30-day "wash sale" rule and allows mark-to-market tax treatment for dealers and traders.

  • Revenue-Positive: Crucially, the legislation is estimated to be revenue-positive, generating approximately $600 million over 2025-2034, enhancing its political viability.

These House and Senate initiatives are deeply interconnected, forming a complementary two-pronged strategy: the House bills focus on the "macro" framework, while the Lummis tax bill addresses the "micro" framework of daily interaction. This comprehensive approach dramatically increases the probability of meaningful, comprehensive legislation being passed in 2025. For Bitcoin, this implies a significant de-risking of the U.S. market, potentially unlocking demand from vast pools of sidelined institutional capital.

The Broader Ecosystem: Mining Sector Health and Network Probabilities

Beyond price action and regulation, the broader Bitcoin ecosystem shows signs of a robust and multifaceted network.

• Bitcoin Mining Stocks: Shares of major Bitcoin miners (e.g., Riot Platforms, Hut 8, Marathon Digital) have surged by significant double-digit percentages (13% to 28%) over four trading sessions. This rally was fueled by Bitcoin's price challenging $110,000 and a broader market upswing. This performance indicates robust investor confidence in the future profitability of the mining sector and Bitcoin's long-term price appreciation, even as some companies curtailed operations for cost efficiency.

• Solo Miner Success: A small-scale solo miner, using a modest 2.3 petahashes per second (PH/s) rig, successfully mined a Bitcoin block against "incredible odds," earning the full block reward of approximately 3.17 BTC (around $349,028). This rare event, with about a 1 in 2,800 chance on any given day, serves as a powerful reminder of the probabilistic nature of Bitcoin's Proof-of-Work and reinforces the decentralized, permissionless, and egalitarian ethos of the network.

These stories together illustrate a healthy and functioning network, from professionalized, industrial-scale operations viewed as viable investments by public markets to the persistent possibility of individual success, countering centralization narratives.

Conclusion and Forward Outlook

The long-term, structural bull case is strengthening significantly, driven by unprecedented U.S. regulatory progress and the relentless, ETF-driven demand creating a fundamental supply shock. This shift to a low-velocity, institutional asset base is transforming the market's structure, making it more robust. However, potent cyclical headwinds from a hawkish macroeconomic environment are suppressing risk appetite and capping upward price momentum, as visualized by bearish divergences and stalls at key resistance levels. The path forward will be determined by which of these dominant forces yields first. A decisive dovish turn in macroeconomic data could swiftly remove the price cap, allowing the supply squeeze pressure to fuel a rapid ascent. Conversely, a significant faltering of institutional demand, evidenced by sustained ETF outflows, could give bears the upper hand.

The key is to look beyond short-term price volatility and focus on the profound structural shifts underway. The current consolidation is a sign of a maturing asset class adapting to its expanding role in the global macro landscape. Patience and a steadfast focus on fundamental drivers—regulatory progress, institutional infrastructure development, and underlying supply-demand dynamics—will be paramount.

Key Citations

House Announces Week of July 14th as “Crypto Week” | U.S. House ..., accessed July 4, 2025, https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=410793

US GOP To Consider 3 Crypto Bills In Mid-July 'Crypto Week', accessed July 4, 2025, https://cointelegraph.com/news/us-republicans-declare-crypto-week-to-mull-3-crypto-bills

Lummis Unveils Digital Asset Tax Legislation, accessed July 4, 2025, https://www.lummis.senate.gov/press-releases/lummis-unveils-digital-asset-tax-legislation/

Senator Lummis Pushes Making Small Crypto Transactions Tax-Free in 'Big Beautiful Bill', accessed July 4, 2025, https://unchainedcrypto.com/senator-lummis-pushes-making-small-crypto-transactions-tax-free-in-big-beautiful-bill/

A BILL - Senator Cynthia Lummis, accessed July 4, 2025, https://www.lummis.senate.gov/wp-content/uploads/Lummis-Crypto-Tax-Bill.pdf

7 Things to Know from the New Lummis-Gillibrand Cryptocurrency Bill - Gordon Law Group, accessed July 4, 2025, https://gordonlaw.com/learn/lummis-gillibrand-cryptocurrency-bill/

Lummis unveils crypto tax package - Punchbowl News, accessed July 4, 2025, https://punchbowl.news/article/vault/lummis-crytpo-tax-pkg/

Bitcoin Supply Shock? Percentage of BTC on Exchanges Drops ..., accessed July 4, 2025, https://cointelegraph.com/news/less-than-15-bitcoin-left-on-crypto-exchanges-signals-supply-problem

Bitcoin mining stocks post double-digit gains in weekly rally - Cointelegraph, accessed July 4, 2025, https://cointelegraph.com/news/bitcoin-mining-stocks-post-double-digit-gains-weekly-rally

Bitcoin surges to $110,500 before consolidation; Ethereum gains ..., accessed July 4, 2025, https://www.business-standard.com/markets/cryptocurrency/bitcoin-surges-to-110-500-before-consolidation-ethereum-gains-momentum-125070400250_1.html

Bitcoin Faces Resistance as Bearish Divergences Emerge, accessed July 4, 2025, https://cointelegraph.com/news/bitcoin-price-aims-for-new-highs-but-divergences-set-dollar110k-as-resistance

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Traders pile into Bitcoin as optimism mounts $136,000 record is ..., accessed July 4, 2025, https://www.dlnews.com/articles/markets/traders-pile-bullish-bitcoin-bets-investors-eye-136k-ath/

Bitcoin Transactions Per Day - Real-Time & Historical Trends, accessed July 4, 2025, https://ycharts.com/indicators/bitcoin_transactions_per_day

Bitcoin solo miner banks $350K with 2.3 petahash in 'incredible odds' - Cointelegraph, accessed July 4, 2025, https://cointelegraph.com/news/bitcoin-solo-miner-wins-350-000-with-measly-2-3-petahash