‘Only hedge funds, retail sold’ — Will BTC sustain rally as Bitcoin ETF flows turn positive?

U.S Spot Bitcoin ETFs have been on a winning streak for the past five days, effectively hauling in $2.65B in net inflows. 

The strong demand has flipped the ETF positive on a year-to-date (YTD) basis and lifted BTC’s price to an eight-month high of $87K. However, the bullish momentum is still facing renewed bond market pressure and a potential Fed rate hike in October. 

Can Bitcoin ETF demand survive macro pressure?

This week’s massive Spot BTC ETF demand turned YTD flows positive with $349M, according to Galaxy Research data.

On Monday alone, the ETF complex attracted $1B in daily inflows. On Tuesday, they hauled in another $714M, with these figures dropping slightly on Wednesday to $346M.

Overall, the ETF complex pulled in $2.65B. Out of the $2.65B demand seen over the past five days, BlackRock drove half of the ETF flows. 

In fact, even Bloomberg analyst James Seyffart noted that the recent traction could soon help the cumulative flows (aggregate demand since inception) turn positive too.

Since last October, the cumulative flows had dipped by $12B (77.8K BTC). However, the rebound has now erased it by half. The cumulative flows, or total BTC held by the ETF complex, were only down by 5.7% at press time. 

Here, it’s worth pointing out that Seyffart added that the outflows were mainly driven by hedge funds and retail.

By far, the biggest sellers of the ETFs over the last ~year were hedge funds and retail traders/investors.

The cumulative flows stood at $55B, despite the crypto winter. However, the institutional resilience and remarkable BTC ETF demand are being tested again by the bond market crisis and fears of another Fed rate hike. 

The bond yield jumped again to 5.1%, and oil prices also ticked slightly higher, reinforcing new inflation fears.

Similarly, interest rate traders seemed to be pricing a 64% chance of another hike during the next October Fed meeting. This dampened risk appetite mid-week and dragged BTC from $87K to below $84K on the charts.  

What’s next for Bitcoin?

In the past, U.S. Treasury intervention plans to control bond yields have been viewed as net inflationary and an overall boost to scarce assets such as BTC and gold. Whether that narrative will hold and drive BTC higher remains to be seen. 

For the rate hike fears, however, the asset typically remains muted before the Fed decision and tends to push higher afterwards. 

For his part, analyst Benjamin Cowen projected that the uptrend could only be confirmed if there is a weekly candlestick close above $82K (May peak). 

Final Summary

• Bitcoin is facing double macro pressure from rising bond yields and Fed rate hike fears
• Asset slipped by about 4% but could reinforce strength if it holds above the May peak of $82K