ETF Bounce Checks Into Rehab: Seven Days In, Two Days Out, Still $5B Down for the Year 🪫

U.S. spot Bitcoin exchange-traded funds closed last week with a net gain of roughly $34 million after a seven-session inflow streak that pulled in close to $1 billion was erased by back-to-back outflows of $225.2 million on Thursday and $240 million on Friday, according to Farside Investors data. BlackRock's iShares Bitcoin Trust ETF, trading under the ticker IBIT, accounted for just under $415 million of the two-day retreat, including $202.5 million on Thursday alone, while Fidelity's FBTC, Bitwise's BITB, ARK 21Shares' ARKB, Franklin Templeton's EZBC, and WisdomTree's BTCW posted smaller losses and Morgan Stanley's MSBT added $5 million on Thursday. The streak had peaked on July 20 with a $226.9 million daily inflow, the strongest session since July 6, and brought cumulative net inflows across the category to $51.8 billion with total net assets at $80.9 billion.

The turn coincided with renewed U.S.-Iran military tensions that pushed oil prices higher, sent Bitcoin briefly under the $65,000 mark to touch $64,600, and dragged the Crypto Fear & Greed Index down three points to 28, still in "fear" territory. HashKey senior researcher Tim Sun told Decrypt the reversal showed institutions making "tactical, phased allocations near the temporary price bottom," reflecting "a lack of a solid foundation" for a sustained uptrend. Sun tied the move to weakening macro conditions, including bond markets pricing higher odds of a Federal Reserve rate hike, and noted that U.S. stock funds posted net outflows for a second straight week and bond funds broke a run of inflows, pointing to "a broader contraction across asset allocations." Grayscale head of research Zach Pandl argued in a note last week that Bitcoin's bottom "may already be in" if the Fed holds off on further rate hikes.

Even with the two-day pullback, July is on track to become the first month of positive net ETF flows since April, when spot Bitcoin ETFs recorded $1.97 billion in inflows. Year-to-date net outflows now stand at roughly $4.84 billion, down from about $5.8 billion earlier in July, after June marked the largest monthly outflow on record at $4.51 billion. The eight-week outflow streak preceding the July rebound had drained more than $8.2 billion from the 13 U.S. spot Bitcoin funds since mid-May.

Spot Ether ETFs also broke their own eight-week losing streak earlier in July, pulling in about $84.4 million in the week ended July 10 and following up with roughly $105 million in the week of July 13–17, the strongest weekly figure since April. BlackRock's iShares Ethereum Trust, trading under the ticker ETHA, accounted for the majority of daily net positive flows across the nine-issuer complex, and ETHA's cumulative net inflow has reached $11.28 billion against approximately $11.07 billion in cumulative complex-wide inflows since launch. Ether funds extended their own streak to five sessions on Thursday with a $26.3 million addition even as Bitcoin funds bled.

Analysts remain split on whether the rebound marks a durable shift in institutional demand or a tactical bounce. XS.com head of business development Simon-Peter Massabni said Bitcoin needs to "decisively break above the $65,000–$65,500 range" to confirm a new uptrend, while Citi on July 1 cut its 12-month Bitcoin ETF inflow forecast from $10 billion to zero and lowered its 12-month Bitcoin price target from $112,000 to $82,000. 10x Research founder Markus Thielen said ETF and stablecoin outflows plus August and September seasonality remain headwinds, and on prediction market Myriad users place a 37% chance on BTC's next move taking it to $84,000, up from 20% at the start of the month, with the Federal Reserve's next rate decision landing July 29.