Bitcoin’s recent return above $65,000 coincided with US spot Bitcoin ETFs attracting $75.7 million in inflows last week, the second consecutive week of net positive flows. However, this modest recovery masks a much deeper and ongoing capital flight. Over the past eight weeks, $8.2 billion exited these funds, with only $273.1 million clawed back since early July less than 3.3% of the outflows.

ETF Flows and Market Sentiment Divergence

The inflows following a $197.4 million net entry the prior week signal some renewed investor interest. This uptick began as the funds ended a 10-day streak of daily redemptions in early July. Yet, the scale of June’s exodus was unprecedented. $4.5 billion left the ETFs during that month alone, shattering the February 2025 record of $3.56 billion. BlackRock’s iShares Bitcoin Trust (IBIT) was the primary driver, accounting for nearly 79% of the June withdrawals.

Assets under management now stand at approximately $77 billion, down sharply from $104 billion in mid-May. The volatility continues within these moves: Monday saw an outsized single-day outflow of $424.7 million amid renewed US-Iran tensions, before subsequent inflows resumed during the week.

Long-Term Cycles May Trump Weekly Flows

Comparisons to gold ETFs offer a framework for interpreting bitcoin’s ETF dynamics. Bloomberg Intelligence analyst Eric Balchunas highlights how GLD, the US-listed gold ETF, experienced dramatic cycles: from $76 billion to $22 billion and back up to nearly $190 billion, with each recovery reaching new highs. IBIT’s path has echoes of this, having peaked above $100 billion last October before bitcoin’s 48% price drop from $126,080.

Balchunas suggests bitcoin ETFs could follow a similar pattern of sharp gains, significant drawdowns, and protracted recoveries testing investors’ patience. This contrasts with Citigroup’s more cautious stance: its July 1 revision cut bitcoin’s 12-month target from $112,000 to $82,000 and anticipates zero ETF inflows in the coming year, citing stalled crypto regulation and weak institutional appetite.

BlackRock CEO Larry Fink’s more optimistic outlook frames the current positive flows as signaling the end of the washout phase. Yet, with bond markets beginning to price in renewed Federal Reserve rate hike risks, the sustainability of inflows and the timing of bitcoin’s next major move remain uncertain.

This material is informational and not financial advice.