TBW - Crypto market: Bitcoin holds course despite turbulence
Relief from Japan
The main trigger for the rebound is macroeconomic. For nine consecutive days, Japanese government bond (JGB) yields climbed, threatening to trigger a massive unwinding of the "yen carry trade." In plain terms: billions of dollars borrowed cheaply in Japan and invested abroad (including in crypto) risked flowing back home, draining global liquidity. Tokyo calmed markets by proposing that the GPIF (the world's largest pension fund, with roughly €1.8 trillion in assets) increase its purchases of Japanese government bonds. Yields pulled back, markets exhaled, but the respite remains fragile ahead of the Bank of Japan meeting in late July.
A structurally different bear market
On the fundamentals side, US asset manager Bitwise sees the current downturn as the "most moderate structural bear market" in Bitcoin's history. The current drawdown stands at roughly 50% from the highs, compared with 78% in 2022 and 84% in 2018. The reason: the profile of the marginal investor has changed. In 2022, clients were asking whether crypto would survive; in 2026, they are asking about entry points and optimal position sizing.
In practice, institutional investors already positioned are using the dip to add to their holdings (a strategy known as "dollar-cost averaging," i.e. investing at regular intervals to smooth out the purchase price). Other, larger pools of capital are still waiting for a clearer regulatory framework before committing. Bitwise estimates that Bitcoin's floor rises with each cycle, a sign that the asset is "maturing" and that the typical buyer is shifting from the retail speculator to the professional allocator.
AI: rival and ally
One often-overlooked factor: since April, ETFs linked to semiconductors and AI have attracted approximately $12 billion, while spot Bitcoin ETFs have recorded more than $4 billion in outflows. The enthusiasm around artificial intelligence is capturing a share of the capital that might otherwise have flowed into crypto.
But Bitwise sees this dynamic reversing over time. When the AI frenzy normalizes and valuations compress, allocators will look for the asset trading at a 50% discount with improving fundamentals. Moreover, the two sectors are increasingly converging: autonomous AI agents are beginning to rely on stablecoins and machine-to-machine payment infrastructure, creating bridges between the two ecosystems.
Risks to watch
Despite these encouraging signals, headwinds remain real. Persistent US inflation is pushing back hopes of Fed rate cuts, the dollar remains strong, and geopolitical tensions (notably between the United States and Iran) are keeping the risk premium elevated. Bitcoin briefly dipped to around $61,500 on Wednesday, with approximately $350 million in leveraged positions liquidated.
Key calendar
Three dates will set the tone for the coming weeks: the US inflation print (CPI) on July 14, the Fed meeting on July 28-29, and the Bank of Japan meeting on July 30-31. On the regulatory front, the Clarity Act (the US bill that could open the door to trillions of dollars in institutional capital) is not expected to come to a vote before the fall.
The crypto market is going through a phase of consolidation, not collapse. The floor is rising, institutions are accumulating, but the next significant move will hinge on macroeconomics and regulatory clarity. The second half of July will be decisive.