(July 20): US-listed spot bitcoin exchange-traded funds recorded a second consecutive week of net inflows after nearly two months of capital flight, raising hopes that cryptocurrencies may be finding a floor.
The 13 spot bitcoin ETFs attracted US$75.7 million (RM23.33 million) last week, adding to the US$197.4 million they secured the previous week. That’s despite investors draining US$424.7 million from the funds last Monday after renewed military conflict between the US and Iran.
The reversal, combined with flows into ETFs tied to ether, the second-largest cryptocurrency, could signal positive sentiment returning to the market, according to Richard Galvin, executive chairman at crypto investment firm DACM.
“I think it is a sign of bottoming,” Galvin said. “Given their size and breadth, the ETFs have become a good read on general sentiment to bitcoin and the sector. So an about-face after eight straight weeks, now confirmed across a fortnight, is positive.”
Bitcoin has moved back above its 200-week moving average, which stands at around US$63,300 and is seen as a critical demarcation line between a prolonged bearish or bullish market. For weeks the token has remained largely constrained in a US$60,000 to US$65,000 range amid broader macro uncertainty.
Bitcoin showed resilience in Asia today even after fresh US strikes on Iran, briefly rising above US$65,000 in early trading. Yet the war carries inflation risks.
The prospect that the US Federal Reserve may raise interest rates could be holding off a full return of institutional capital, according to Damien Loh, chief investment officer at Ericsenz Capital. Passage of the long-awaited Clarity Act, a US market-structure bill, before Congress’s August recess could provide a catalyst for bitcoin to move higher, he added.
Bitcoin’s recent price action indicates “strong support, despite a downturn in risk assets and with hostilities renewed in the Middle East", Loh said. “The US-Iran conflict matters in so much as it increases interest rates, which affect all risk assets.”
Bitcoin is down roughly 10% since the start of June, when Strategy Inc disclosed that it had sold a small portion of its holdings for the first time since 2022. Founder Michael Saylor had positioned the company as a bitcoin accumulator, vowing to continuously buy the cryptocurrency with proceeds from equity sales and to never sell it.
Strategy sold US$263.5 million of common stock in the week through July 19 but made no bitcoin purchases, according to a Monday filing. The company instead increased its dollar reserve to US$3.23 billion, reinforcing a recent shift toward preserving liquidity rather than automatically directing fresh capital into the token.
More recently, with bitcoin sitting around half its October high of US$126,000, it became increasingly difficult for Strategy to meet its dividend obligations. Saylor signalled a greater willingness to sell the token when necessary, and the company disclosed on July 6 that it sold another US$216 million of bitcoin, significantly higher than the previous US$2.5 million sale.
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