Bitcoin managed to cling close to $65,500 even as U.S. spot bitcoin ETFs saw a sudden withdrawal of $465 million across two days last week. This abrupt pullback halted a week-long inflow streak that had added nearly $1 billion, yet the broader market liquidity in the U.S. keeps expanding, hitting $5.92 trillion. The contrasting signals suggest the recent drops are more about liquidations of leveraged positions than a widespread loss of confidence.
ETF Redemptions Interrupt a Winning Run
On July 23 and 24, bitcoin ETFs in the U.S. experienced significant outflows, with redemptions of $225.1 million and $240.08 million respectively. These withdrawals ended a seven-session rally that had seen almost $1 billion of fresh investments over the previous week. Despite this, the weekly net inflows remained slightly positive at $33.79 million, indicating that the selling pressure reduced much of the prior momentum but did not completely reverse it. Bitcoin’s price stayed relatively steady, oscillating between $63,700 and $65,400 before settling near $65,000.
Since their peak in October 2025, U.S. spot bitcoin ETFs have lost over 160,000 BTC, marking the largest annual decrease since these products launched in January 2024.
Forced Liquidations Drive Price Moves, Not Investor Exodus
Saeed Al-Marri, CEO of Ethra Invest, pointed out that the recent price dips are mainly the result of forced liquidations on long positions rather than investors abandoning bitcoin altogether. He noted that long positions are being closed out at a rate six times higher than shorts, reflecting a market where bullish bets are getting wiped rather than a broad exit.
This perspective aligns with mid-July data when $73.15 million worth of bitcoin positions were liquidated in a single day, with long traders accounting for $62.63 million and shorts only $10.52 million.
U.S. Liquidity at Multi-Decade Highs
The overall macroeconomic backdrop adds nuance to the bearish interpretation. U.S. net liquidity, which measures cash available to flow into risk assets after accounting for the Federal Reserve’s balance sheet, Treasury General Account, and reverse repurchase agreements, has climbed over 3% in 12 weeks to approximately $5.92 trillion. Analysts tracking this metric note that current levels sit in the 80th percentile of all weekly readings since 2003, a range historically linked to easier financial conditions rather than tightening.
Meanwhile, the Federal Reserve’s reverse repo facility the tool used to mop up excess liquidity has been shrinking towards zero, further underscoring abundant cash in the market.
This material is for informational purposes only and does not constitute financial advice.
