Bitcoin’s price surged from $64,000 to $66,000 over two days, propelled by a spike in leveraged trading rather than a renewed wave of spot buying, according to on-chain data platform CryptoQuant. Analyst Sunny Mom indicated that this recent climb appears fragile, citing a lack of significant spot volume behind the move.
Leverage-backed surge raises concerns
Open interest in Bitcoin futures jumped from $21.2 billion to $23 billion as prices rose, marking a new all-time high. This increase in open interest suggests that traders added new leveraged positions instead of simply closing shorts.
At the same time, spot volume has remained subdued since April, failing to signal genuine buying activity in the spot market. Despite the apparent momentum, Bitcoin’s actual support from direct purchases of the asset remains weak.
As of the latest data, Bitcoin trades at $65,725.07, reflecting a 0.95% dip over the last 24 hours but a 1.89% gain for the week, according to CoinGecko.
Funding rates briefly turned negative on July 18 and July 19, fueling a short squeeze that helped power the rebound toward $66,000. Open interest continued to climb throughout the rally, reinforcing the idea that additional leverage, rather than short covering alone, was at play.
Funding has not reached overheated levels, but the rally lacks robust support. Spot volume needs to strengthen before bulls can feel confident in further upside, suggested the analysis by Sunny Mom.
CryptoQuant’s data shows futures volume in a neutral zone, with no major spike accompanying the rally. This further indicates that the current market conditions are not at an extreme, but a convincing breakout remains elusive without spot activity picking up.
Spot demand remains muted
Trading activity in the spot market has yet to reflect the excitement seen in derivatives. Since April, spot volume has been in a cooling phase, signaling that volatility is largely being driven by traders in the futures market and not by widespread buying on exchanges.
Stablecoin netflows on exchanges turned negative during the rally. While the overall stablecoin market cap has only slowed, capital is moving away from exchanges to the sidelines instead of exiting crypto entirely.
United States spot bitcoin ETFs recorded their second straight week of inflows, with $271 million added on July 20. BlackRock’s IBIT saw the largest single-day inflow, attracting $116.5 million. These figures suggest institutional interest is returning, albeit at a gradual pace. Regardless, these flows have not been strong enough to change the spot market’s subdued state.
| Date | Bitcoin Price | Open Interest | Spot Volume Trend | Notable ETF Inflow |
|---|---|---|---|---|
| July 17 | $64,000 | $21.2B | Cooling | – |
| July 20 | $66,000 | $23B | Cooling | IBIT $116.5M |
Mini dictionary: CryptoQuant is a blockchain analytics platform that provides on-chain data and insights for cryptocurrency traders and investors, helping them track important market signals such as open interest, volume, and investor behavior across exchanges.
Traders eye FOMC reversal as Fed meeting nears
Trader Astronomer initiated a countertrend short position after Bitcoin surpassed $66,000, pointing to a recurring price pattern ahead of Federal Reserve policy meetings. This so-called “FOMC reversal” refers to a trend where Bitcoin’s price tends to change direction a few days prior to an official Fed announcement.
Past cycles have shown this pattern to be highly reliable, with the next Fed meeting scheduled for July 29. The trader includes it as one factor among several within a larger trading strategy.
Market participants frequently reduce risk before major Federal Reserve statements, anticipating price swings. This behavior has historically aligned with early reversals, rather than reactions immediately following the announcement.
The recent rally, therefore, combines a leveraged short squeeze, steadily rising open interest, and modest ETF inflows while spot demand remains weak. Analysts at CryptoQuant caution that, while the market does not appear overheated, the price could swiftly correct if leveraged positions unwind in the coming days.
With the Federal Reserve meeting set for July 29, traders are expected to monitor spot volume for signs of genuine buying interest and to gauge if the recent upward move can sustain its momentum beyond leveraged speculation.
