More than $500 million in net inflows over the past three trading sessions suggests institutional selling pressure is weakening. Swissblock now believes the worst of the ETF sell-off may be over.
Bitcoin Recovery Builds Momentum
Bitcoin seems to be showing early signs of recovery after one of the largest waves of spot exchange-traded fund (ETF) selling this year. However, analysts warn that stronger demand is still needed before the market can sustain a rally.
According to crypto investment firm Swissblock, the recent period of heavy ETF outflows may finally be coming to an end. The company described the previous selling pressure as the "most overwhelming ETF distribution wave of this bear market" and believes the worst of the institutional selling has likely passed. Swissblock believes that Bitcoin's risk profile eased from what it describes as "Capitulation Risk," while spot Bitcoin ETF flows have started turning slightly positive again.
The shift follows an extended period of persistent outflows from US spot Bitcoin ETFs. Beginning on June 17, the funds experienced ten consecutive trading days of net outflows totaling approximately $2.7 billion.
However, sentiment began to improve afterward, with the ETFs recording more than $500 million in combined net inflows over the following three trading sessions. Although Wednesday interrupted the recovery with a relatively modest net outflow of $84.9 million, Swissblock believes the overall trend suggests that institutional selling pressure is weakening.
Bitcoin ETF flows (Source: Farside Investors)
Despite the improving ETF picture, Swissblock warned that investors should stay cautious. The firm described the recent inflows as a positive development but pointed out that institutional conviction has not yet returned in full.
In its view, the market is no longer experiencing the same level of panic selling, but it is still too early to conclude that a sustained bullish trend has started. The company questioned whether the storm actually passed or whether Bitcoin is simply moving through the "eye of the storm" before another period of volatility.
CryptoQuant supports this cautious outlook. Research contributor IT Tech pointed to a meaningful recovery in overall Bitcoin demand during the past week. Thirty-day cumulative demand recovered from nearly negative 500,000 BTC to approximately negative 75,000 BTC. While this represents a big improvement, overall demand is still below positive territory.
Bitcoin spot and perpetual futures demand (Source: CryptoQuant)
According to CryptoQuant, futures demand has recovered far more quickly, moving from approximately negative 295,000 BTC to slightly positive levels. Spot market demand, however, is still negative. This could indicate that investors purchasing actual Bitcoin are still approaching the market more cautiously than traders using derivatives.
For now, the improving ETF flows and recovering futures demand suggest that market conditions are becoming healthier than they were just a few weeks ago.
