By Linh Tran, Market Analyst at XS.com
August 1, 2025:
Bitcoin (BTC) continues to trade below its all-time high around $122,125, marking four consecutive sessions of decline—a clear sign of growing corrective pressure amid increasingly cautious market sentiment. Although the recent pullback has been relatively modest and has not disrupted the medium-term bullish structure, the price action reflects a fading sense of euphoria and a partial retreat of speculative capital.
One of the key reasons BTC has failed to break higher is the rising caution from institutional investors. This week, net inflows into spot Bitcoin ETFs have dropped significantly compared to previous weeks, signaling that large-scale capital is currently on the sidelines, awaiting clearer confirmation from both monetary policy direction and macroeconomic data.
This deceleration in ETF inflows, especially as BTC consolidates near its all-time high, may be interpreted as a sign of hesitation and indecision—something the crypto market is particularly sensitive to and often reacts to sharply.
The Federal Reserve’s decision to keep interest rates unchanged during the recent FOMC meeting was largely in line with market expectations. However, the Fed refrained from signaling any near-term rate cuts, despite political pressure from President Donald Trump. This lack of dovish guidance has contributed to a more cautious tone among investors.
At the same time, the U.S. dollar has continued to strengthen, with the DXY index rising steadily from the 96.600 level and now approaching the 100 mark. The dollar’s strong recovery has consistently exerted downward pressure on risk assets—particularly those like Bitcoin. In an environment of high interest rates and a strong dollar, Bitcoin’s expected returns tend to be more heavily discounted, reducing the incentive for investors to hold the asset.
In the short term, all eyes are on the upcoming U.S. Non-Farm Payrolls (NFP) report and the unemployment rate, due to be released later today. These will be key catalysts that could shape expectations for the Fed’s future policy direction. If job data remains strong without fueling inflation concerns, BTC could benefit from renewed expectations of policy easing in the near term. Conversely, a hotter-than-expected NFP figure or a surprise drop in unemployment could reinforce expectations that the Fed will maintain higher interest rates for longer—an outcome likely to weigh on BTC in the short run.
It’s worth noting that Bitcoin pulling back after reaching a new all-time high is not unusual. Historically, such corrections around key resistance levels have played a crucial role in rebalancing market positions, allowing for fresh accumulation and the establishment of a new price floor. In the current context, BTC may require a healthy correction to build a more solid base before targeting higher levels. A retracement does not imply a trend reversal, but rather presents an opportunity for longer-term investors to accumulate with greater confidence.
In the near term, Bitcoin faces several headwinds from the macroeconomic environment: a strengthening U.S. dollar, slowing ETF inflows, and uncertainty around U.S. economic data. Nonetheless, BTC’s long-term uptrend remains intact—as long as key psychological support levels are not decisively broken. The market is likely to continue watching for clearer confirmation from support zones and a revival of institutional flows, which could increase the likelihood of a more sustained bull run in the second half of 2025.