Bitcoin has experienced reduced volatility and liquidations at the start of July compared to early June, but a recovery is not assured. Demand has dropped dramatically, with spot ETF flows turning positive only for three days since July 2 after being overwhelmingly negative since mid-May. The apparent demand metric—the difference between new issuance and supply inactive over a year—remained negative throughout 2026, though it improved to -75,000 BTC from a low of -275,000 BTC. Rising leverage, indicated by estimated leverage ratio at 0.241 and positive funding rates, suggests speculative interest persists without corresponding spot demand, making any price bounce fragile.
Bitcoin saw less volatility at the start of July compared to the tumultuous price action of early June. However, this does not necessarily signal a month for recovery, as demand has dropped dramatically. Spot ETF flows have been positive for the past three trading days from July 2, but since mid-May they have been overwhelmingly negative with only three days of net inflows.
The apparent demand metric tracks whether accumulation by long-term holders is sufficient to absorb new supply. According to Darkfost, the metric has been negative throughout 2026, though it improved slightly over the past three weeks to -75,000 BTC, compared to the year’s lowest value of -275,000 BTC. Another analyst, Novaque Research, used the estimated leverage ratio and positive funding rates to assert that a major leverage reset has occurred. Yet speculative excesses have not been wholly trimmed to allow clean accumulation trends.
Across all exchanges, the estimated leverage ratio reached 0.241, just above the 100-day moving average, according to CryptoQuant. Funding rates also flipped positive after remaining mostly negative for months. Together, these signals show rising leverage in the market, while spot price trends remained weak.
The weak apparent demand indicates that any price bounce would offer only a fragile buying setup. The June sell-off saw excessive long liquidations as market participants eager to catch the market bottom got burned. Although long-term holders were accumulating, macroeconomic developments could mean the final capitulation phase has not yet occurred.
