Bitcoin ETFs Pull In $510M, Reversing Eight-Week Slump
Wall Street’s Bitcoin ETFs have snapped an eight-week, $8 billion sell-off with $510 million in fresh inflows, though persistent inflation and elevated buyer costs keep a breakout elusive.
Bitcoin exchange-traded funds recorded $510 million in net inflows over the past three days, halting a brutal eight-week drawdown that drained roughly $8 billion from the products. The sudden reversal marks the largest influx since early May, when the record outflow cycle began.
The return of capital suggests investor sentiment may be stabilizing after a prolonged risk-off period. “It looks like sentiment might be turning a corner,” said James Butterfill, head of research at CoinShares. “They are the largest inflows we’ve seen since the outflows began in early May, suggesting we’re maybe through the worst of it.”
This stabilization comes after Bitcoin plummeted to a 21-month low of $58,000 earlier this month, exacerbating a steep decline from an October peak of $126,000. The token has since recovered modestly, changing hands around $62,000 on Wednesday, a 4% increase over the past week.
Despite the recent bounce, the broader ETF investor base remains deep in the red. Data from Glassnode indicates the average Bitcoin ETF buyer established their position when the digital asset was valued around $83,800. This elevated cost basis means the vast majority of allocations are currently sitting on losses.
Heavy selling by large holders, often referred to as whales, appears to be easing. Investors holding 1,000 Bitcoin or more have offloaded more than $40 billion worth of the token since last year's peak. However, Butterfill noted that this particular source of negative price pressure has recently abated.
The recent drawdown wiped out 8% of total assets under management across Bitcoin ETFs, a proportional loss that closely mirrors the cycle lows experienced in 2018. It also echoes a similar $5.2 billion drawdown seen last February. Even at its most severe, the recent slump saw daily net outflows peak at $733 million, a threshold surpassed several times last year.
While the immediate liquidation panic seems to have passed, macroeconomic headwinds will likely prevent a sustained price breakout. Expectations of tighter monetary policy in the U.S., driven by persistent inflation and geopolitical conflict in the Middle East, are acting as a ceiling on risk assets.
“We’re not in a situation where we can say the Fed is on the cusp of cutting rates, and that would be very supportive to Bitcoin,” Butterfill said. “Bitcoin remains very, very sensitive to the inflation outlook, and by proxy, the Iran war and the outlook from the Fed.”
