Bitcoin (BTC) has shown strength over the past week, rising above the $63,000 level, but the rally remains fragile until exchange-traded fund (ETF) inflows expand in the upcoming trading sessions, according to Wintermute.
The market-making firm noted in an X post on Tuesday that crypto was at the front of the latest risk-on move in financial markets, with Bitcoin climbing 6.75% after recovering the low-$60,000 range.
Whale accumulation, options positioning push Bitcoin above $60,000
The uptrend was led by whale wallets, which reportedly accumulated more than 270,000 BTC near Bitcoin’s 200-week moving average. Options positioning also shifted away from downside protection toward bullish $60,000-$70,000 call options.
“Price, positioning, and onchain data all pointed the same direction,” Wintermute wrote.
The firm’s analysts pointed to easing macro conditions, a slightly more dovish Federal Reserve (Fed) and de-escalation in the Middle East as key drivers of the rebound. However, they warned that the recovery remains fragile despite an encouraging shift in ETF flows.
“The structural weaknesses we’ve flagged for weeks around ETF and capital flows into the space haven’t meaningfully changed on the back of one print leaving us still somewhat cautious,” wrote Wintermute. “We’d want to see that inflow sustained over consecutive sessions before reading it as the start of a real reversal rather than a one-off squeeze-adjacent print.”
ETF selling continues to weigh on Bitcoin’s recovery
The cautious outlook aligns with a separate report from K33, which argued that ETF selling has been a dominant force behind Bitcoin’s weak performance this year.
K33 noted that Bitcoin fell 28.71% between Jan. 1 and June 24, marking one of its weakest first-half performances on record despite a wave of institutional adoption initiatives that expanded investor access to the asset.
“The sales pressure from BTC ETFs has been uniquely large in the past month […] and in an inactive environment, large sellers have an abnormal impact,” K33 wrote.
The weakness persisted despite several developments that would ordinarily be viewed as supportive for the digital asset industry. During the period, Morgan Stanley expanded crypto investing across its wealth management business, Bank of America authorized advisers to recommend modest Bitcoin ETF allocations, and Fannie Mae advanced crypto mortgage initiatives.
Historical indicators point to a possible market bottom
Analysts at K33 noted that more than half of Bitcoin’s circulating supply is now held at a loss, a condition that has historically appeared near major bear-market bottoms in previous cycles, including 2011, 2014, 2018 and 2022.
While previous instances were often followed by long-term recoveries, K33 cautions that additional downside occurred before the market ultimately established its cycle low.
Following such conditions, historical drawdowns ranged from 15% to 46%, indicating that the latest reading does not necessarily guarantee an immediate reversal. The report also notes that Bitcoin traded only 4.29% above its 200-week moving average in early June, a relatively rare occurrence that has historically coincided with deep bear-market conditions.
Bitcoin is trading at $63,400, down 0.3% in the past 24 hours at the time of writing.
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