Bitcoin has traded sideways for two months as institutional activity paused, resetting sentiment and potentially setting up a bullish September. While smaller altcoins continue to bleed, larger ones like ETH and SOL show resilience, and Bitcoin Dominance is trending lower—often a precursor to altcoin season. Key catalysts could include upcoming SEC or CFTC rulemaking, such as exemptive relief, following July’s pro-crypto legislation that sparked rallies. Macro signals remain mixed: Q2 GDP revisions and PCE data may have minor impact, but Fed rate cuts aren’t essential for a rally and may even signal weakness, echoing past cycles.

OpenAI’s rumored launch of GPT-5 in early August could serve as a major catalyst for tech stocks, especially given the market’s recent gains driven largely by AI hype and the performance of the Magnificent Seven. If GPT-5 is perceived as approaching Artificial General Intelligence, it could spark renewed enthusiasm, similar to China’s DeepSeek launch in February. This timing could either propel the market to new highs or help offset potential drawdowns following the implementation of U.S. tariffs on August 1st. Since crypto is closely correlated with tech stocks, a rally could also lift AI-related cryptos. Meanwhile, a slow rotation from Bitcoin to Ethereum is underway, keeping altcoins relatively strong despite recent market pullbacks. 

Tensions in the Middle East may be easing, and the Trump administration is reportedly considering delaying tariffs initially set for July 8-9, adding to a shifting macro backdrop. The most notable change, however, comes from the Federal Reserve, with Chairman Jerome Powell signaling a more dovish stance and hinting at possible rate cuts if inflation continues to drop. This, alongside weaker economic data, has led to lower bond yields and a declining DXY—conditions that historically increase global liquidity and support crypto markets, though with a time lag. Concurrently, crypto faces a wave of bullish catalysts, including the upcoming tradability of the WLFI token, a possible SEC exemptive order that could temporarily legalize most crypto activity in the U.S., and progress in Congress on the GENIUS and CLARITY Acts. While short-term volatility may persist due to geopolitical and trade uncertainties, the medium-term outlook for crypto appears increasingly optimistic.

Crypto, especially Bitcoin, appears to be decoupling from traditional assets, with prices rising even as stocks and bonds fall. Upcoming macro data—revised Q1 GDP and PCE inflation—could reveal a “Goldilocks” scenario of steady growth and falling inflation, potentially fueling a market rally. Despite rising yields and Fed tightening, historical precedent and ongoing fiscal stimulus suggest that markets, including crypto, could continue to climb, with Bitcoin possibly acting as a leading indicator of liquidity.