Key facts
- U.S. spot Bitcoin ETFs saw net outflows for two consecutive days, totaling $465 million.
- BlackRock's IBIT was the largest driver of these outflows.
- The outflows reversed a prior seven-day inflow streak.
- Analysts linked the reversal to macroeconomic concerns such as U.S.-Iran tensions and potential Fed rate hikes.
- Despite recent outflows, the ETFs finished the past week with a net positive inflow of $34 million.
U.S. spot Bitcoin exchange-traded funds (ETFs) experienced net outflows for a second consecutive day on Friday, reversing a seven-day streak of inflows. The funds shed a total of $465 million over Thursday and Friday, significantly reducing the approximately $1 billion accumulated during the preceding inflow period. BlackRock's iShares Bitcoin Trust (IBIT) was the primary driver of these outflows, accounting for nearly $415 million of the two-day selling.
Analysts attribute this reversal to a shift towards risk-off sentiment in broader financial markets. Factors cited include renewed tensions between the U.S. and Iran, crude oil prices exceeding $100 per barrel, and increasing expectations of a potential Federal Reserve interest rate hike later this year. Tim Sun, Senior Researcher at HashKey, suggested that the rapid outflows, particularly from large, liquid funds like IBIT, indicate institutions are tactically reducing their short-term Bitcoin exposure rather than making conviction buys.
Sun noted that the pullback was not isolated to cryptocurrencies, with U.S. stock funds also posting outflows for a second week. This broader contraction across asset allocations suggests that capital is remaining cautious due to macroeconomic risks. He warned that further increases in rate-hike expectations could lead to additional capital outflows from Bitcoin and downward price pressure.
Despite the recent outflows, Bitcoin is trading around $65,300, up 1.9% for the week. Prediction markets show an increased chance of Bitcoin reaching $84,000. Zach Pandl, head of research at Grayscale, suggested that Bitcoin's bottom may already be in if the Federal Reserve pauses rate hikes, challenging the four-year cycle theory. The upcoming Federal Reserve meeting on July 29 will be a key test, with current market pricing indicating a 34% chance of a 25 basis point rate hike.
Stephen Wundke, strategy and revenue director at Algoz Technologies, agreed that the trend reversed due to renewed geopolitical concerns and rising oil prices. He expressed optimism for a rebound, anticipating that if geopolitical tensions ease and oil prices stabilize, ETF inflows and Bitcoin prices could climb steadily. However, he cautioned that August is typically a quiet month for crypto, suggesting that significant price movements might not occur until later in the year, potentially driven by a resolution in the Middle East.