The cryptocurrency market started July on a positive note, leaving behind a rather stressful first half of 2026. Santiment, a popular on-chain data and social analytics company, assessed the current state of the market and its potential trajectory for the second half of the year.
Santiment analysts noted that the recovery following the sharp declines in June was encouraging, but issued important warnings to investors regarding critical metrics.
Santiment analysts say that after Bitcoin ($BTC) lost approximately 14% of its value in June, markets finally breathed a sigh of relief in the first days of July. On a weekly basis, Bitcoin recorded a 3.8% recovery, while Ethereum (ETH) returned to the $1,730 level with a strong 13% jump.
Analysts argue that recently, crypto investors have begun to view crypto as a “weaker investment” compared to traditional stock markets, but this overly pessimistic perception has actually created an opportunity for Bitcoin to “catch up.” While US stock markets (S&P 500) fell by 0.3% in the last three trading days before the Independence Day holiday, Bitcoin rallied by 5.5%, outperforming stocks.
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Another data point supporting this situation is the Market Value to Realized Value (MVRV) ratio. The Santiment team notes that the 30-day short-term MVRV is at the break-even point (0.05%), but the 365-day long-term MVRV remains around -30%. According to analysts, this picture shows that prices still have significant upside potential and that the current period carries more potential for an upward ceiling than downside risks.
The most striking point in the report, and the one that prompted analysts to urge investors to “be cautious,” was the wallet activity. According to Santiment data, “whale and shark” wallets holding between 10 and 10,000 $BTC sold a total of 70,848 Bitcoin in the approximately 10 weeks since April 24th.
In response to these sell-offs by large investors, small retail investors continue to aggressively buy on every dip. Analysts point out that historically, healthy and sustained rallies have occurred during periods when “small investors are scared and sell, while whales buy.” The fact that the current situation is the exact opposite raises serious questions about the health of the market.
Macroeconomic and geopolitical uncertainties are behind the reluctance of large investors to make aggressive moves. Analysts note that tensions between the US and Iran and the situation in the Middle East have pushed whales into a more protectionist phase. However, it is stated that the growing negative narratives, particularly regarding Michael Saylor and STRC, have created a wave of institutional distrust in the market.
The almost continuous net outflows from spot Bitcoin ETFs over the past two months also confirm this uncertainty. Although July 2nd saw the highest daily ETF inflow in two months, Santiment analysts remain skeptical about whether these inflows represent a lasting trend reversal due to weaknesses in whale metrics.
Finally, analysts point out that funding rates in futures markets have reached their highest levels in the last six months, adding that this could act as a counter-indicator and trigger a short-term pullback to liquidate long positions.
Furthermore, noting that the “Lighter” network, which has gained 113% in value in the last 90 days in terms of on-chain network activity, is currently the hottest network, the Santiment team argues that such sudden address surges are usually an indicator of extreme FOMO and that a price correction may occur soon.
*This is not investment advice.
