Markets begin the new week with a more balanced backdrop as Bitcoin extends its recovery from recent lows and the first signs of stabilizing institutional flows begin to emerge. At the same time, macro uncertainty remains elevated. While European equities continue to strengthen and carry trades deliver outsized returns, rising volatility across semiconductor stocks, fiscal concerns in the UK, and ongoing central bank uncertainty suggest investors should remain selective rather than complacent.

This report breaks down the key forces shaping markets this week: why improving crypto sentiment still falls short of confirming a broader recovery, how shifting macro leadership is creating both opportunities and risks across global markets, and the technical levels that will determine whether Bitcoin can extend its recent breakout.

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Start with the easy trade of the cycle: borrow dollars, buy high-yielding emerging-market currencies like the Brazilian real, Colombian peso, and Turkish lira, and collect the difference. That basket is up roughly 25% since early 2025, powered by high EM interest rates and a soft dollar. It's a great return story, but it's also a crowded one, these trades tend to unwind fast and hard the moment volatility returns, so don't mistake the smooth chart for a safe one.

Speaking of volatility returning, chip stocks are where it's showing up first. A weak AI-guidance update from Broadcom and a fresh Wall Street selloff have pushed swings in global semiconductor stocks to their highest since the 2020 pandemic shock, with Samsung and SK Hynix among the casualties. Because chips have driven so much of this market's gains, this kind of stress is a warning that AI-valuation nerves could spread well beyond the sector itself.

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European stocks are telling the opposite story. The Stoxx 600 just logged four straight weekly gains and hit fresh highs, helped by a soft US jobs report that's cooled bets on a Fed rate hike, plus gains broadening beyond tech into banks, industrials, and defence. A rally that isn't riding on a handful of tech giants tends to have sturdier legs, a reassuring sign after the recent chip-driven scare.

Meanwhile in bonds, UK yields show investors demanding a bigger premium to hold long-dated gilts than they do for US or German debt. Persistent fiscal deficits and a heavy load of inflation-linked debt are the main culprits, and this spread is essentially the market's live verdict on UK fiscal credibility, the wider it gets, the more it costs Britain to borrow, and the more it squeezes the broader economy.

Put it all together and you get a market split down the middle: carry trades and European stocks are rewarding risk-taking, while chip volatility and UK yields are flashing early caution. Central bank policy is the thread tying it together, a Fed leaning toward patience, and a Bank of England boxed in by fiscal strain, so watch that path closely. Enjoy the gains, but keep some dry powder for when the calm breaks.

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Sentiment has improved modestly, with the Fear & Greed Index rising to 23, moving the market out of extreme fear but remaining firmly in fear territory. While investor confidence has recovered slightly following the recent rebound, overall sentiment remains cautious as market participants continue to navigate an uncertain macro environment.

Bitcoin ETF flows also showed an early sign of stabilization, recording their first day of net inflows on July 2 after a prolonged streak of net outflows that began on June 12. Approximately $203M entered Bitcoin ETF products during the session. However, total assets under management remain subdued at around $73B, reflecting the significant capital that has already left the market.

Although improving sentiment and the return of ETF inflows are constructive developments, the sharp decline in total ETF assets suggests institutional conviction remains relatively weak. Sustained inflows over the coming weeks will likely be needed before confidence can recover more meaningfully and support a broader market recovery.

The week ahead features several key economic releases that could shape expectations around labor market conditions, economic activity, and the Federal Reserve's next policy decisions. Markets will begin by focusing on the June S&P Global Services PMI on Monday, providing an updated snapshot of activity across the U.S. services sector.

Attention then shifts to the ADP Employment Change report on Tuesday before Wednesday delivers the latest Federal Reserve Meeting Minutes, which will be closely scrutinized for additional insight into policymakers' outlook on inflation, interest rates, and the broader economy.

Thursday brings two important releases: Initial Jobless Claims and June Existing Home Sales, offering fresh signals on labor market conditions and housing demand. The week concludes with the IEA Monthly Oil Market Report on Friday, which could influence energy prices and inflation expectations. Taken together, labor market data, Fed communication, and economic activity indicators will remain the primary drivers of market expectations, with potential implications for equities, bonds, and crypto markets in the near term.

Bitcoin continued trending higher after reclaiming the $60,700 technical level on Thursday and is now trading around $63,000, just 4% below the next higher technical target at $65,500, which was lost in mid-June.

The two-week liquidation heatmap shows leveraged liquidation clusters positioned primarily below the current price, with the most notable cluster around $57,000. On the upside, much of the leverage around $63,000 has already been cleared, while new liquidation clusters are gradually building toward the $66,000 region. Moves in either direction remain possible, with the downside cluster potentially acting as a price target in the event of a reversal.

Bullish Scenario: Bitcoin needs to hold the $60,700 technical level with conviction, offering long opportunities targeting the $65,500 resistance level, with invalidation on a move back below the reclaimed support. Should price reclaim $65,500, additional long opportunities may emerge on a confirmed bullish retest, targeting a move toward $72,000.

Bearish Scenario: Bitcoin needs to face rejection at $65,500, with short entries becoming valid on a confirmed bearish retest of that level, targeting $60,700 and invalidated on a reclaim above resistance. A decisive break below $60,700 would then open further downside toward $58,300, similarly invalidated on a reclaim back above the broken support level.

Looking at the bigger picture, TOTAL3 continues to follow Bitcoin. The metric has also moved higher and is now trading around $681B, just below the next higher technical target at $695B, which was lost on June 18.

ETH/BTC has also shown strength, trending higher ever since bouncing off the 0.026 technical level on June 26. The next higher technical target sits at 0.0299, a level that was lost in April and has not been reclaimed since.

Taken together, despite ETH/BTC's recent short-term strength, the current structure suggests that broader altcoin momentum remains weak, and sustained trend reversals or broader bullish phases for altcoins are not yet expected. We continue to favor maintaining a larger cash position, with exposure focused primarily on BTC and, selectively, a few top-10 altcoins.

We hope this report provided you with valuable insights into the latest market developments and geopolitical shifts.

As always, stay informed, stay prepared, and have a fantastic week ahead! 🚀

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