For the first time in 10 days, money flowed into Bitcoin ETFs instead of out. But the rebound was lopsided - some funds soaked up cash while others kept leaking.
The prior outflows had been driven by rising expectations of further rate hikes and a strengthening U.S. dollar, which made risk assets less appealing. Thursday's inflows signaled a sharp turn in sentiment, even as BlackRock's IBIT continued to see net redemptions.
The turning point was the U.S. jobs report for June. The economy added only 57,000 nonfarm payrolls, far below the forecast of about 110,000. That disappointment, combined with Fed Chair Kevin Warsh saying inflation risks had eased, made investors rethink interest-rate hikes.
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The weak jobs report weakened expectations of further rate hikes, which improved sentiment for risk assets. Bitrue Research Institute's lead analyst, Andri Fauzan Adziima, said Warsh's comments "improved overall market sentiment," driving inflows to Bitcoin ETFs and sparking Bitcoin's rebound over $61,000.
Earlier that week, Bitcoin's price had dropped below $58,000 - a 21-month low. After the inflows on Thursday, it climbed above $61,000, according to CoinGecko.
The same positive mood lifted Ethereum ETFs too. They saw $14.9 million in net inflows on Wednesday and $29.1 million on Thursday. Adziima noted that "the same positive shift is now supporting renewed flows into Ethereum ETFs as well."
But some analysts warn the bounce could be short-lived. Tim Sun, senior researcher at HashKey, said the shift came from "the marginal shift in interest rate expectations." He explained that the weak jobs report was "weakening the market's anticipation of further rate hikes." Still, he cautioned that Bitcoin's path remains tied to the U.S. dollar, real interest rates, and Fed policy.
Algoz Technologies strategy and revenue director Stephen Wundke described what happened. He said investors were "looking for a BTC bottom or recognising oversold assets started to bottom fish." Bitcoin may "bounce around the bottom for a few more weeks," he said, "but the direction of travel is clear to see."
Traders on the Myriad prediction market (a platform owned by Decrypt's parent company Dastan) still expect Bitcoin to fall, giving a 74% probability that its next move will be to $55,000 rather than $84,000 - nearly unchanged from a week earlier.
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