Bitcoin Hits $122K as Institutional Demand Climbs, Tariff Uncertainty Keeps Risk Appetite in Check

This week marked another critical inflection point across global risk assets, with crypto markets extending their breakout despite elevated macro crosscurrents. Bitcoin closed multiple sessions at new weekly and intraday all-time highs, ultimately breaching $122,000 by Sunday night following days of steady accumulation. Institutional demand remained the core driver, even as broader markets struggled to sustain momentum amid intensifying U.S. trade policy headlines.

The risk-on tone across crypto decoupled from weakness in equities and EM assets, as investors recalibrated expectations around inflation, interest rates, and trade fragmentation. Bitcoin’s rally was amplified by significant inflows into spot ETFs and bullish sentiment from industry and institutional allocators. Metaplanet’s latest BTC acquisition, coupled with renewed commentary from figures like Elon Musk, further fuelled upside sentiment. Ether followed with a sharp weekly gain, ending at $3,021, as ETH ETFs saw their second-highest single-day inflows on record.

At the same time, the market digested a wave of geopolitical and economic developments, notably the U.S. administration’s July 8 rollout of tariff warning letters and its August 1 implementation date for a 10% levy on BRICS-aligned economies. Emerging market currencies and equities broadly sold off, while U.S. Treasury yields rose and oil prices rebounded on renewed OPEC+ support.

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Bitcoin Breaks Above $122K as ETF Demand Surges

Bitcoin surged to a new all-time high of $122,011 on Sunday, capping a week of strong institutional tailwinds and macro recalibration. This move followed a brief dip below $108,000 over the weekend, which was quickly bought up as ETF-driven inflows returned. Thursday marked the second-largest net inflow day ever for Bitcoin ETFs, with $1.17 billion in flows led by BlackRock’s IBIT ($448M) and Fidelity’s FBTC ($324M).

Cumulative BTC ETF inflows in 2025 now exceed $28 billion, far outpacing miner issuance ($7.85B YTD), underscoring persistent structural demand. Metaplanet, Japan’s leading corporate BTC holder, announced it had purchased another 2,205 BTC for $238.7M, bringing its total holdings to over 15,500 BTC. The corporate’s Q2 results showed revenue growth of 42% YoY, reinforcing the conviction among BTC-aligned companies. Meanwhile, Elon Musk publicly reiterated support for Bitcoin through his newly proposed “America Party,” further bolstering sentiment.

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ETF Appetite Spreads to Ether Amid Broader Market Divergence

The week’s bullish breakout wasn’t limited to Bitcoin. Ether jumped 17.5% to $3,021 by Sunday as institutional allocations broadened. Ether spot ETFs posted $383.1 million in net inflows Thursday, their second-highest day on record, with BlackRock’s ETHA pulling in $300.9M alone. Notably, ETF inflows on that day exceeded 60x ETH’s net issuance.

Despite rising demand, many traditional platforms (including Vanguard) still restrict access to these products. The imbalance between demand and available supply continues to underpin bullish medium-term positioning.

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Tariff Volatility Returns, Global Markets Search for Direction

Macro headlines were dominated by the Trump administration’s evolving tariff strategy. After setting a July 9 deadline for deal finalization, the administration began sending formal letters to countries without trade agreements. An August 1 implementation date was confirmed, with a potential three-week extension for some nations still on the table. A 10% tariff threat was also levied against BRICS-aligned nations, sparking broad-based EM selling.

South Africa’s rand fell nearly 1%, while the rupee and yuan also weakened. U.S. equity futures pulled back midweek, and Tesla shares fell 6% following unrelated political news. Meanwhile, the U.S. dollar posted its largest gain in three weeks, rising 0.4%, as investors sought shelter amid rising policy uncertainty.

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Commodities and Bond Markets React Cautiously

Oil and gold prices edged higher, with Brent crude up 0.6% to $68.70 after OPEC+ announced a larger-than-expected production increase, interpreted as a vote of confidence in global demand. Gold rose 0.5%, trading near $3,339/oz.

Bond markets reflected mild inflation concerns but remained stable overall. The U.S. 10-year Treasury yield held at 4.35%, while Japan’s 30-year yield surged 10bps to 2.96% amid fiscal policy speculation. Goldman Sachs warned that escalating tariffs could reintroduce inflationary pressures and complicate the Fed’s expected rate-cutting trajectory.

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Regulatory Developments and TON Controversy

The SEC delayed its decision on Fidelity’s spot Solana ETF proposal, extending its review to July 31. While engagement with issuers has continued, there’s little optimism for early approval, with most participants expecting decisions to be tied to broader listing standards in Q4. In contrast, the TON Foundation sparked controversy after unveiling a $100,000 staking-based “Golden Visa” program in the UAE, a claim quickly denied by local authorities. The Foundation has since clarified the initiative remains exploratory and is not affiliated with any official UAE process.

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FOMC Minutes: Dovish Undertone, Data Sensitivity Ahead

The June FOMC minutes struck a slightly dovish tone, reinforcing a data-dependent stance. While the Fed held rates steady at 4.25%–4.50%, participants acknowledged cooling inflation and flagged tariffs as a potential source of upside risk. A few members expressed openness to cuts as early as the next meeting, contingent on continued softening in growth and price data.

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FOMC Minutes: Dovish Undertone, Data Sensitivity Ahead

We finally got the move that drove the realised vol higher with all the repricing that you would expect from a rapid spot rally. The atm vols became less steep, the gamma contracts caught good bids and finally risk reversals repriced higher. The last of the moves is essentially driven by traders closing their short calls inventory and getting rid of long puts. Given the dovish fed vs tariffs impact conundrum, some choppiness in spot is expected to remain and give support to the front end of the curve.

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Looking Ahead: CPI, Retail Sales, and Fed Policy Signals

Next week brings a heavy slate of data that could shape near-term Fed expectations:

• Tuesday: CPI m/m and y/y (expected 2.4%) – a softer print may reinforce dovish outlook
• Wednesday: PPI and Core PPI m/m – signals on cooling input prices
• Thursday: Core Retail Sales (–0.3%) and Retail Sales (–0.9%) – downside surprises could stoke growth concerns
• Thursday: Initial Jobless Claims (~227K expected) and Philly Fed Index (–4.0expected)
• Friday: University of Michigan Consumer Sentiment (forecast 60.7), with inflation expectations eyed at 5.0%