The cryptocurrency market has kicked off July with renewed energy, as Bitcoin (BTC) surged past the $110,000 mark, breaking free from its recent downtrend. The sharp rebound comes after a turbulent start to the week, where prices dipped amid investor uncertainty. Now, sentiment appears to have shifted dramatically, with analysts attributing the turnaround to a combination of strong ETF inflows, speculative interest, and improving macroeconomic conditions.

As of July 3rd, Bitcoin was trading at approximately $110,200 on Binance, up 12% from its June lows. The breakout was particularly significant on the 12-hour chart, where BTC decisively moved above its descending trend channel, which had acted as resistance for weeks. This technical breakout has fueled optimism among bulls who believe that a longer-term upside move could be forming despite the usual summer lull in market activity.

Beyond Bitcoin, the broader crypto market also turned green. Among Layer-1 networks, Cardano (ADA) posted an 8% daily gain, outperforming its peers. Ethereum (ETH) followed closely with a 6.5% increase. Other notable gainers included Litecoin (LTC), which jumped 9%, and Solana (SOL) and XRP, which saw gains of 4.7% and 4.5%, respectively. Even Bitcoin, despite its already strong run, added another 2.3% on the day.

In the decentralized finance (DeFi) sector, Uniswap (UNI) led the rally with a 9% surge. Meanwhile, in the cryptocoin arena, Bonk (BONK) stole the spotlight, surging 20% as speculative trading returned in full force. These gains weren’t limited to niche sectors; the entire market seemed to benefit from renewed momentum.

A primary catalyst behind the bullish sentiment was a notable uptick in spot Bitcoin ETF inflows. On July 2nd alone, ETFs saw a combined inflow of $407.78 million, reversing the $342 million outflow recorded earlier in the week. This sharp turnaround suggests that institutional investors are stepping back into the market after a brief pause, perhaps eyeing potential long-term gains.

Simultaneously, data from CryptoQuant indicated a 10% spike in speculative interest, especially from leveraged traders. While this influx of risk capital has helped push prices higher in the short term, it also introduces potential volatility. When prices are driven by leveraged longs, the market becomes vulnerable to sudden corrections and liquidations if sentiment turns.

Joshua Deuk, Head of Trade at Mozaik Capital, noted that the macroeconomic landscape has also shifted in crypto’s favor. According to Deuk, geopolitical risks have receded following President Donald Trump’s de-escalation of tensions in the Middle East. Additionally, volatility in the oil market has calmed. These developments, combined with growing expectations of a U.S. Federal Reserve interest rate cut in September, have created a more favorable backdrop for risk assets like cryptocurrencies.

Despite the recent strength, Deuk believes that crypto markets may still experience range-bound trading during the summer. With no significant macroeconomic events expected until September, trading volumes could thin out, and prices might consolidate before the next big move. “No major macro risks on the calendar until September. That’s when people get back to desks, and real activity picks up again,” he said.

However, not everyone shares the same optimism. Analysts at Santiment have warned that the current rally is largely driven by retail FOMO—fear of missing out. According to their data, when retail interest spikes disproportionately, the market often experiences sharp pullbacks, as prices move contrary to retail expectations.

Swissblock analysts echoed similar concerns, pointing out that the recent breakout lacked strong spot market buying to sustain it over the long term. They argue that ETF inflows alone may not be enough to maintain momentum without a corresponding increase in organic demand.

Adding to the cautionary voices, BitMEX founder Arthur Hayes suggested that a summer liquidity squeeze could soon hit the markets. He warned that risk assets might be forced into sideways movement or even face a drop, potentially dragging Bitcoin down to the $90,000 level if buyers don’t remain consistent.

In summary, while the recent price surge across the crypto market has brought fresh enthusiasm, the rally appears to be fueled by both promising developments and speculative energy. Investors would do well to remain vigilant, as the summer months may still deliver surprises.