Investor interest in Bitcoin-linked exchange traded funds (ETFs) has shifted dramatically after weeks of heavy outflows, with net inflows totaling $510 million over the last three trading sessions. This marks the first major sign of renewed investor confidence following a prolonged period of withdrawals from crypto funds.
Signs of a rebound after a sharp outflow streak
On Wall Street, Bitcoin ETFs are regarded as the primary gateway for institutional exposure to cryptocurrency markets. For three consecutive days since Friday, these funds have attracted net inflows. James Butterfill, head of research at global crypto investment firm 21Shares, said the recent figures could reflect a modest recovery in sentiment, following the significant withdrawals that began in early May.
James Butterfill highlights that the latest inflows represent the strongest wave of buying since the May sell-off, suggesting that the toughest phase for the market may be over.
Bitcoin ETFs have registered a total outflow of around $8 billion over the past eight weeks. During the same period, investor caution has become more pronounced, bringing the year-to-date net outflows to $2.8 billion.
Price bounces back but investors still facing losses
As of Wednesday, Bitcoin was trading near $62,000—a gain of roughly 4 percent over the past week. Earlier this month, the price had dipped as low as $58,000. Despite this recovery, many ETF investors remain under water. According to data from Glassnode, the average entry price for investors in these products hovers around $83,800, well above current market levels.
Butterfill notes that the most recent wave of outflows equated to about eight percent of the assets managed by Bitcoin ETFs. He draws parallels with investor behavior at the bottom of the 2018 crypto cycle, and adds that the scale of this year’s withdrawals rivals those witnessed in February, when investors pulled $5.2 billion from the market.
Whale sales and Fed expectations weigh on market sentiment
Much of the recent pressure on Bitcoin prices has been linked to actions by large investors, or “whales.” Butterfill points out that holders with over 1,000 Bitcoins have collectively sold more than $40 billion worth of Bitcoin since last year’s price peaks. Encouragingly, this selling pressure appears to have eased in recent weeks.
However, Butterfill cautions that uncertainty around the direction of US monetary policy could pose challenges for a sustainable breakout. With the Federal Reserve maintaining a hawkish stance to combat inflation and ongoing geopolitical tensions in the Middle East impacting risk appetite, Bitcoin is likely to remain sensitive to policy signals and inflation data.
Butterfill underscores that it is too soon to declare the Fed is on the verge of rate cuts, emphasizing that Bitcoin retains a high degree of sensitivity to shifts in inflation and central bank guidance.
Meanwhile, although the latest bout of ETF outflows was notable, the daily withdrawal volumes did not surpass last year’s most severe episodes. According to CoinGlass, the largest single-day net outflow in the recent downturn was $733 million—below the peaks seen multiple times in 2023.
