US-listed spot Bitcoin exchange-traded funds have experienced a second consecutive week of net inflows after nearly two months of capital outflows, fueling hopes that the cryptocurrency market may be stabilizing.
The 13 spot Bitcoin ETFs attracted $75.7 million last week, building on the $197.4 million collected the week before. This comes in the wake of investors withdrawing $424.7 million from the funds last Monday, following heightened military tensions between the US and Iran.
This shift, along with inflows into ETFs linked to Ether, the second-largest cryptocurrency, may suggest a revival of positive sentiment in the market, according to Richard Galvin, executive chairman at crypto investment firm DACM.
“I see this as a sign that we may be reaching a bottom,” Galvin remarked. “Given their size and diversity, the ETFs offer a reliable measure of overall sentiment towards Bitcoin and the broader market. A turnaround after eight consecutive weeks of declines, now confirmed over the last two weeks, is a promising indicator.”
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Bitcoin has reclaimed its spot above the 200-week moving average, approximately $63,300, which is deemed a vital pivot between a long-term bearish or bullish market. For several weeks, the asset has mostly hovered within the $60,000 to $65,000 range amid broader macroeconomic instability.
In Asia today, Bitcoin demonstrated resilience even in the wake of new US strikes on Iran, briefly surpassing $65,000 in early trading. However, ongoing conflict raises inflation concerns.
The potential for the US Federal Reserve to raise interest rates may be hindering a full resurgence of institutional investment, according to Damien Loh, chief investment officer at Ericsenz Capital. The expected passage of the long-anticipated Clarity Act, a US market-structure bill, before Congress’s August recess could serve as a trigger for Bitcoin’s upward trajectory, he noted.
Bitcoin’s recent price actions reflect “strong support, even amidst declines in risk assets and renewed conflicts in the Middle East,” Loh commented. “The US-Iran situation is crucial, especially since it raises interest rates, affecting all risk assets.”
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Since early June, Bitcoin has decreased by roughly 10%, coinciding with Strategy Inc.’s revelation that it sold a small portion of its holdings for the first time since 2022. Founder Michael Saylor positioned the company as a Bitcoin buyer, vowing to continue acquiring the cryptocurrency using proceeds from equity sales and to never sell.
Strategy sold $263.5 million of common stock during the week ending July 19 but did not purchase any Bitcoin, according to a Monday filing. Instead, the company boosted its cash reserves to $3.23 billion, emphasizing a recent shift towards maintaining liquidity rather than reinvesting automatically into the token.
With Bitcoin now at around half of its peak of $126,000 reached in October, it has become more challenging for Strategy to meet its dividend obligations. Saylor has expressed a greater willingness to sell the token when necessary, and the company disclosed on July 6 that it sold another $216 million worth of Bitcoin, significantly surpassing the earlier sale of $2.5 million.
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