(July 27): Heavy outflows from US-listed bitcoin exchange-traded funds late last week underscored the fragility of the token’s recent recovery.

The ETFs in the spot market saw more than US$465 million (RM1.9 billion) of outflows on July 23 and July 24, snapping a seven-session inflow streak, as concerns that the US Federal Reserve could raise interest rates overshadowed recent momentum behind the Clarity Act, a long-awaited US cryptocurrency market-structure bill.

Shifting developments in the Middle East have added to bitcoin’s volatility in recent days. The original cryptocurrency climbed back above US$65,000 on Monday, rising as much as 1.4% alongside other risk assets. It later pared some of its gains and was trading up around 1% at 6.20am in New York (6.20pm Malaysia).

The advance came after the US and Iran extended a pause in retaliatory strikes, easing concerns about potential disruptions to regional energy supplies following a recent escalation in the conflict.

“We expect macro-driven uncertainty to persist this week, but our outlook on bitcoin remains structurally bullish,” said Ivan Lim, a senior derivatives trader at FalconX. “The recent bitcoin ETF outflows and fragile mood are largely a reaction to legislative waiting around the Clarity Act and faster Fed rate hike expectations.”

Ethics provisions remain a key point of disagreement over the Clarity Act, as lawmakers seek to secure enough Democratic votes before the August recess. Democrats are demanding tougher language to prevent US President Donald Trump from profiting off the crypto industry his administration regulates. His recently disclosed US$1.4 billion windfall from crypto ventures last year has further inflamed the issue.

Despite the surge in withdrawals during the last two trading days, the bitcoin ETFs recorded US$33.8 million of inflows for the full week. That marked a third consecutive week of inflows following eight weeks in which investors pulled US$8.3 billion from the funds.

The late-week withdrawals, led by BlackRock Inc’s IBIT, suggest that while institutional investors have returned selectively after a prolonged period of redemptions, conviction remains weak. The latest data indicate investors are still quick to take profits or pare exposure when market sentiment deteriorates.

“The next couple of sessions are the tell,” said Rachael Lucas, an analyst at BTC Markets. Stabilising flows point to an event-driven pause. A second week of outflows would be more serious.”

Uploaded by Arion Yeow