Crypto Market Pulse - July 21, 2025

LAST WEEK RECAP:

This week was all about crypto. Even with strong macro tailwinds—namely cooler inflation data—risk-on flows were most aggressive in digital assets, not equities.

The U.S. Core CPI came in soft, offering another piece of the puzzle that points to disinflation regaining traction. That was enough to push the S&P 500 to another all-time high at 6,296, but compared to what happened in crypto, equities looked tame.

Crypto Week on Capitol Hill turned out to be far more than a symbolic headline risk. It delivered.

• The House passed the Clarity Act, a long-awaited market structure bill that finally gives crypto assets a definitional and regulatory framework
• The GENIUS Act, focused on stablecoins, was passed and signed into law by President Trump.
• The Anti-CBDC Surveillance Act also cleared the House, putting the nail in the coffin for any U.S. central bank digital currency—at least for now.
• And the biggest kicker: Trump is preparing an executive order to unlock $9T in retirement assets (401(k) plans) for crypto, gold, and private equity allocations.

The response in crypto was immediate and forceful.

• BTC ripped to 120k before cooling to trade around 117k—still holding gains, but overshadowed by the ETH breakout.
• ETH exploded from 2.9k to 3.8k, pushing toward year-to-date highs and eyeing the 2024 peak above 4k.
• The rally in ETH was turbocharged by two forces: a) the GENIUS Act, which strengthens the investment case for Ethereum as the dominant settlement layer for stablecoins, and b) continued treasury accumulation of ETH, with corporate bids appearing relentless.
• The ETH-led surge crushed BTC dominance, setting up what many in the space are calling the early innings of “alt szn.”
• TOTAL3 broke through resistance, soaring to $1.05T, confirming broad-based follow-through in altcoins.

Looking ahead, the heavy-hitting crypto catalysts are now in the rearview—so the focus likely shifts back to macro. With rate cuts inching closer, the market may now lean more heavily on the inflation and employment data to keep the momentum going.

But structurally, crypto just got a regulatory greenlight. That matters. And if risk stays bid across the board, there’s more room to run—especially in alts.

Stay long, stay tactical.

BTC WEEKLY VIEW

BTC faced resistance around the 122–123K level and is undergoing a brief consolidation. However, the overall uptrend remains intact, and the broader outlook continues to be bullish.

ETH WEEKLY VIEW

ETH shows no signs of slowing down and appears to be making a direct move toward new highs. However, with the price breaking above $4K, it’s entering uncharted territory, and the risk of a pullback should not be overlooked.

ETH/BTC

ETH/BTC has shown an impressive rally, but in the short term, it may have reached the 1:1 zone, suggesting limited upside ahead. Caution is advised as there could be a potential pullback.

TOTAL3 USD MARKET STRENGTH

Total3 is also pushing toward new highs. Watch closely how the price behaves near the previous peak, as selling pressure and a potential pullback could emerge in that area.

TOTAL3 BTC MARKET STRENGTH

The rebound in Total3/BTC has played out as expected, with altcoins rallying while BTC consolidates. This rotation of capital into the broader altcoin market is typical during periods of BTC ranging, and it reflects growing risk appetite among investors. As long as BTC remains stable, altcoins may continue to outperform — but caution is warranted if BTC resumes high volatility.

MARKET LEVERAGE RATIO

Stablecoin liquidity is being actively deployed into the broader crypto market. As long as this ratio trends upward, it supports the continuation of the current altcoin rally and suggests growing investor confidence. However, it's important to monitor for potential exhaustion near key resistance zones, especially if broader macro or BTC volatility returns.

BTC OPEN INTEREST

After peaking near $88B on 14 July, BTC open interest steadily declined over the week, closing around $84B by 21 July. The drop in OI was accompanied by a mild price retracement from ~$122K to ~$117K, suggesting a cooling-off period following the previous week's aggressive rally. The reduction in OI likely reflects long liquidation, profit-taking, or reduced speculative appetite as BTC entered consolidation mode. Notably, OI failed to rebound meaningfully even as price temporarily stabilized mid-week — a sign that market participants may be waiting for clearer direction or upcoming catalysts before re-engaging with leverage.

BTC PERPS FUNDING

BTC funding rates moderated throughout the week as the price lost upward momentum and consolidated. The average funding rate declined to 0.0102, notably lower than the previous week's highs near 0.0189. This pullback in funding aligns with reduced speculative leverage, as traders likely trimmed long exposure following the rally and amid increasing chop.

While a sign of fading bullish momentum and cautious market posture, these levels are still above the bullish 0.01 levels. The sharp drop in price near the end of the week, paired with muted funding, may indicate fewer crowded long positions, potentially reducing the risk of a liquidation cascade.

BTC LONG/SHORT RATIO

The long short ratio swung between longs and shorts before dropping significantly to favor shorts over the weekend.

It could be an indication of more short positions hopping on a downward momentum trade as BTC retraces.

ETH OPEN INTEREST

ETH futures open interest saw a strong and consistent rise over the past week, accompanied by a sharp price rally - indicating aggressive long positioning and renewed bullish sentiment in Ethereum markets.

In stark contrast to BTC, where open interest declined amid price consolidation, ETH saw leveraged interest accelerate into strength. This divergence suggests a potential rotation of speculative capital from BTC into ETH.

The sustained growth in OI alongside price action points to conviction-driven positioning rather than short covering.

ETH PERPS FUNDING

Unlike what we saw in BTC, funding for ETH remained elevated and reached highs of 0.019 before settling at 0.0146 - still remarkably high - indicating strong bullish sentiment.

Price rallied in lockstep with the increase in OI - but OI did start to decrease as price reached new highs, indicating some traders closing positions. However, with the elevated OI, the risk of a deleveraging event remains a risk, as speculative pressure remains.

ETH LONG/SHORT RATIO

Interestingly, despite the bullish momentum in ETH, short accounts dominated for more of the week - perhaps as more accounts tried to find a top.

The ratio turned more short as the weekend action traces from the aggressive rally, likely as traders grow more convicted in determining a top to sell on.

SUMMARY

• Regulatory Breakthroughs Fuel Crypto Surge: U.S. lawmakers passed the Clarity Act and GENIUS Act, providing long-awaited regulatory clarity for crypto and stablecoins — sparking a strong rally across digital assets.
• ETH Outshines BTC: Ethereum surged to $3.8K, outperforming Bitcoin and driving a broad altcoin breakout, with TOTAL3 crossing $1T as ETH gained traction from policy tailwinds and institutional interest.
• Leverage Rotates to ETH, BTC Cools Off: BTC showed signs of consolidation as open interest and funding rates fell, while ETH futures saw rising OI and elevated funding — suggesting continued bullish conviction, but increasing risk of overleverage.

DISCLAIMER:

The information in this report is for information purposes only and is not to be construed as investment or financial advice. All information contained herein is not a solicitation or recommendation to buy or sell digital assets or other financial products.

This post was prepared by Kairon Labs Trader Patrick Li, Travis Su, and Kenny Lee.

Edited by: Shirley Castro