Key takeaways:
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Bitcoin spent the week fighting to hold above $107,000, but exchange inflows remain at historic lows as retail investors choose to sit on the sidelines.
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Stagflation becomes a real risk as US growth slows, but Fed rate cuts could fix the situation and supercharge Bitcoin price.
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Onchain data shows Bitcoiners accumulating, suggesting the next breakout will occur in the Fall of 2025.
After briefly dipping below $99,000, Bitcoin has reclaimed $107,000, fueling hopes of an imminent breakout. Yet, something feels off. There is no FOMO and no retail investor stampede on the buy side. Just a quiet, uneasy rally driven by funds, whales, and traders, while onchain activity looks eerily subdued.
This doesn’t look like a typical bull rally. Beneath the surface, the US economy is flashing warning signs, while the Fed is stuck, torn between fighting inflation and supporting a weakening economy.
In such conditions, Bitcoin could thrive as a hedge against uncertainty. But can a market built on balance sheets—not belief—really break to new highs? With stagflation whispers growing louder, the answer may come this fall.
Should the US brace for stagflation?
The word “stagflation” may not have appeared in Jerome Powell’s semiannual report to Congress on Wednesday, but it hung heavy over his remarks. The Chair of the Federal Reserve reiterated that the central bank is “well positioned to wait” until more data clarifies whether President Donald Trump’s tariffs will trigger a sustained inflation surge. Meanwhile, fresh data signals slowing growth, rising unemployment, and stubborn inflation —the textbook definition of a stagflationary environment.
On June 17, Fed officials slashed their GDP forecast to just 1.4% for 2025, down from 1.7% in March. Inflation projections rose to 3% from the previous 2.7%, while unemployment is now expected to hit 4.5%, up from 4.4%.
Private sector data confirms the trend. The Monday S&P Global PMI flash reading fell to 52.8 in June from 53.0 in May, showing fading momentum. Exports are falling, inventory stockpiles are rising, reflecting the tariff concerns, and consumer demand looks wobbly.
What’s more, on Thursday, the US Bureau of Economic Analysis revised Q1 real GDP from -0.3% to -0.5%, confirming the US economy’s fragility. Even more concerning, personal consumption growth dropped to just 0.5%, its weakest since 2020, while core inflation climbed to 3.8%.
The tariff war, meanwhile, is far from over. As analysts from The Kobeissi Letter warn, President Donald Trump’s 90-day tariff pause now only has 12 days remaining. This means that, without any new trade deals, the US will implement country-specific ‘reciprocal tariffs’ on July 9, including tariffs of up to 50% on EU imports, while maintaining a global 10% baseline tariff.
Meanwhile, trade conditions with China remain on a 90-day pause following the bilateral agreement on May 14, setting a separate deadline for Aug. 12. While today’s framework on rare earth metals and the easing of tech restrictions set the tone, a final deal between the world’s biggest economies is still far from being secured.
As the Israeli-Iran war fades from headlines, the trade war may soon retake the spotlight, and with it, the increased inflationary expectations. For Bitcoin and other hard assets, this macro backdrop is mostly bullish. Yet this bull market is missing a crucial piece.
A bull market without believers?
Bitcoin onchain metrics suggest that the market lacks the broad conviction usually seen in bull cycles. According to CryptoQuant, average Bitcoin inflows to Binance have collapsed to 5,700 BTC per month, lower than levels recorded during the 2022 bear market. In typical bull markets, exchange inflows rise as retail participants chase momentum. This time, silence.
The rapid recovery from last Sunday’s slump, triggered by Israel’s strikes on Iran, shows there is still plenty of money ready to buy the dip. However, as the Glassnode report shows, this money appears concentrated among sophisticated traders, hedge funds, and institutional desks, not the retail crowd. As Bitcoin transaction counts decline and sizes grow, trading has shifted offchain, with perpetual swaps now dominating the action.
Bitcoin Vector, a Willy Woo and Swissblock project, sums it up bluntly:
“The tide is turning in favor of the bulls, but onchain strength is the missing piece. Without a recovery in Fundamentals and key components (Liquidity + Network Growth), the upside remains speculative, driven by leverage, not conviction. Bulls need more than just structure control to sustain this move.”
This raises a crucial question. Can a bull market driven primarily by institutional investors—and not retail enthusiasm—sustain itself?
The summer lull—or the calm before the storm?
While speculation is flourishing offchain, long-term holders are quietly accumulating. Axel Adler Jr. notes that the ratio of long-term to short-term holders is once again rising, as it did before previous rallies around the $28,000 and $60,000 levels. Adler Jr. said,
“Today, at the $100K mark, we again see sustained growth in the LTH/STH ratio: this accumulation phase could last 4-8 weeks, after which, by analogy with previous cycles, a powerful upward reversal is likely.”
If historical patterns hold, Bitcoin’s next leg could target the $160,000 range, according to the analyst.
Seasonality supports this timing. Bitcoin historically underperforms in summer. Data from the past decade shows that between May 21 and Sept. 25, Bitcoin’s average annualized return is just +15%, compared to +138% during the rest of the year. More recently, summer has often been outright bearish, with an average seasonal drawdown of –17.6% since 2017.
This history implies that the coming months may be less about fireworks and more about consolidation—an accumulation phase where supply quietly tightens beneath the surface.
Related: US home mortgage regulator considers Bitcoin amid housing crisis
If the economic data continues to deteriorate—especially jobless claims and the Fed’s favored Core PCE inflation reading expected on Friday and Saturday—the Fed could indeed cut rates in September and October. That easing would arrive right as Bitcoin exits its seasonal slump and long-term holders accumulate enough.
As Glassnode put it, “Structure remains supportive, but a breakout to new highs will likely require a clear pickup in demand, activity, and conviction.” Whether that conviction emerges in time depends on two things: the Fed and whether Bitcoin can once again capture the public’s imagination.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
