Analysis

It’s widely assumed that crypto markets go quiet during the summer, with lower activity, fading volatility, and little directional movement. To do an initial test on the assumption, we run a quick analysis comparing perpetual market sentiment with spot price performance for BTC.

• Sentiment is proxied by average daily funding rates, which reflect directional bias in perpetual futures positioning. Higher rates suggest long positioning is dominant, while lower or negative rates indicate more neutral or short-biased flows.
• Performance is measured by average daily spot returns, offering a simple lens on realized price behavior.

The analysis focuses on monthly seasonality over the past three years (2022–2024) to examine how market expectations (via funding) and outcomes (returns) align, or diverge, across the calendar.

Within this framework, July stands out as a month where sentiment and performance diverge.Despite consistently low funding rates, pointing to caution or limited positioning, BTC has historically performed well in July. This persistent disconnect suggests that the month’s strength is not necessarily driven by directional conviction, but rather reflects a recurring mismatch between sentiment and outcome.

A combination of structural, technical, and seasonal factors is the likely driver behind this. As the start of both a new quarter and the second half of the year, July often coincides with portfolio rebalancing, tactical repositioning, and a re-emergence of risk appetite following more defensive setups in June.

Whether this dynamic stems from participants underestimating the setup or reacting belatedly to evolving market conditions, the outcome is consistent: sentiment remains subdued, while returns tend to exceed expectations.

So in short, rather than a quiet mid-year lull, July consistently behaves more like a reset month, where sentiment lags behind price action and positioning plays catch-up. 

Despite low funding and muted conviction, the market tends to perform well. While the S&P 500 hasn’t posted a negative July in over a decade, BTC has also shown resilience, with only 3 negative July returns in the past 10 years…

Some additional color from our OTC desk on July flow

• OTC volumes defy the narrative: July ranks in the top third of intra-year OTC volume across the past four years, pushing back against the idea of a “quiet summer.”
• Institutionals step back, retail steps in: Data over the last three years shows a slight pullback from institutional flows in July offset by rising retail activity.
• Majors lead, not memes: Surprisingly, it's the majors (ex-memes) that have driven July’s retail volume growth, not the usual speculative small-caps.