Tag: Bitcoin ETF demand

  • Crypto Market Moves ‘as one block’ Despite Broader Rally, Says Cryptex Co-Founder

    Crypto Market Moves ‘as one block’ Despite Broader Rally, Says Cryptex Co-Founder

    Bitcoin and major altcoins have posted sharp gains, but Cryptex Finance data suggests the cryptocurrency rally has not yet produced a broad rotation of capital beyond Bitcoin and Ethereum.

    Cryptex Finance tracks 36 digital assets representing approximately 92% of the cryptocurrency market. Its co-founder, Joe Sticco, told crypto.news that participation in the rally had widened, while capital allocation had not kept pace. As a result, cryptocurrencies have traded more like a single market than a group of assets in which investors are selecting individual winners.

    Cryptex’s market index reached 1,199.69, nearly 20% above its 1,000 base level set on Feb. 20. The index tracks assets across five sectors using Coinbase pricing, offering a broader view than Bitcoin or a small group of leading altcoins.

    Over the previous seven days, however, the index had gained only 1.92%. Sticco said much of the rally from recent lows occurred during a roughly 72-hour period between Aug. 19 and Aug. 21, followed by several days of relatively flat trading.

    “Measure from the low, and you get a rally. Measure the trailing week, which is what most readers think they’re being told, and you get almost nothing,” Sticco said.

    Bitcoin’s acceleration during that period followed a major derivatives flush alongside renewed spot demand. Earlier market coverage showed $BTC rising from below $65,000 to approximately $69,500 on Aug. 19 as more than $1 billion in cryptocurrency short positions were liquidated within an hour.

    Cryptocurrency gains show limited separation between assets

    Price dispersion within the Cryptex index provides another reason Sticco is reluctant to describe the move as a full capital rotation.

    On the day measured by Cryptex, the strongest constituent rose 6.71%, while the weakest fell 1.49%. Although the index covers 36 cryptocurrencies across five sectors, the difference between the best and worst performers was only about eight percentage points.

    “That is not a market sorting winners from losers. That’s a market moving as one block,” Sticco said.

    Sticco said the low level of dispersion indicates that a common market factor is lifting cryptocurrencies together, rather than investors shifting money between assets based on their individual fundamentals.

    Major tokens still recorded notably different headline gains over the broader rally. Sticco estimated Bitcoin’s seven-day increase at roughly 14%, compared with 28% for $XRP and about 19% for Solana.

    Capital allocation did not reflect that apparent range of price performance. Bitcoin dominance remained between approximately 57% and 60%, depending on the market universe used. Sticco also cited an Altcoin Season Index reading below 40, well below the 75 threshold generally used to identify an altcoin season.

    Solana remained more than 50% below its October 2025 level despite gaining about 19% during the week, according to Sticco.

    “Participation broadened. Allocation didn’t,” he said.

    Institutional cryptocurrency flows remain concentrated in Bitcoin and Ethereum

    Regulated investment products provide another way to distinguish rising cryptocurrency prices from the destination of new capital.

    During one recent Wednesday session, U.S. spot Bitcoin ETFs received approximately $232 million, while Ether ETFs attracted roughly $192 million, Sticco said. $XRP products brought in around $28 million, compared with approximately $15 million for HYPE products and $9 million for Solana.

    By Sticco’s calculation, nearly nine out of every 10 dollars went into Bitcoin and Ethereum. Weekly figures showed a similar concentration, with Bitcoin receiving approximately 71% of flows and Ethereum another 26%.

    The concentration has persisted as U.S. spot products have supported Bitcoin’s recovery. A previous report on ETF demand found that U.S. spot Bitcoin ETFs received approximately $1.9 billion over five consecutive inflow sessions by Aug. 24. Analysts said continued spot buying would be necessary after forced short covering helped accelerate the initial breakout.

    Sticco said the subsequent streak had reached eight consecutive sessions of net Bitcoin ETF inflows totaling approximately $2.8 billion. Ether ETFs had also recorded eight positive sessions and more than $1 billion in inflows.

    August Bitcoin ETF inflows had exceeded $3 billion by the time of his comments, making it the strongest month of 2026, according to Sticco. He said BlackRock had absorbed a significant share of the demand, including approximately $1.3 billion during the previous week.

    “Eight straight sessions of regulated spot creations is not what a short squeeze produces,” he said.

    ETF figures nevertheless require an additional distinction when measuring the amount of new institutional money entering Bitcoin.

    Sticco said the net assets held by the funds had increased from approximately $77 billion in mid-August to just above $99 billion by Tuesday, a gain of about $22 billion. Actual net inflows during the eight-session streak totaled only around $2.8 billion.

    Much of the difference came from Bitcoin’s rising price, which increased the value of assets already held by the funds, rather than from investors providing another $22 billion in fresh capital, he said.

    Earlier in August, five consecutive inflow sessions brought approximately $853.5 million into U.S. spot Bitcoin ETFs between Aug. 3 and Aug. 7, reversing withdrawals recorded during the preceding week.

    Sticco also cautioned against assessing August in isolation. He said spot Bitcoin ETFs had lost roughly $5.4 billion during the first half of 2026 and remained approximately $2.5 billion in negative territory for the year despite the latest inflows.

    ETF demand offers a clearer signal than derivatives positioning

    Distinguishing institutional buying from leveraged trading requires examining different parts of the market, according to Sticco.

    ETF flows and market depth measure demand, while funding rates, futures basis and open interest provide more information about trader positioning. Sticco said falling open interest alongside rising prices can indicate that short positions are closing rather than that new buyers are entering the market.

    He declined to characterize current open interest as either bullish or bearish because publicly available readings differed. Some datasets measure open interest in Bitcoin, while others use its dollar value, producing different trends when $BTC moves sharply.

    Market depth presents a similar challenge. Sticco described depth as one of the most useful measures of institutional participation because it shows how much capital can enter or exit without materially moving prices.

    “Price tells you what the last trade cleared at. Depth tells you what the next big one will cost.”

    Publicly available depth figures were not current enough for Sticco to determine how much liquidity had recovered. He pointed to the damage caused by the October 2025 deleveraging event, when an estimated $10 billion to $20 billion in leveraged positions were erased and Bitcoin’s top-of-book depth on major venues fell by more than 90% intraday.

    According to Sticco, market makers subsequently reduced resting liquidity after being left with inventory while hedges were force-closed. That left order books at their thinnest levels since 2022.

    Sticco said the institutional side of the cryptocurrency market had therefore developed faster than the liquidity supporting the underlying market.

    U.S. policy and Treasury conditions contribute to the crypto rally

    Macroeconomic conditions have also played an important role in the latest advance, according to Sticco. He identified the U.S. Treasury’s Aug. 19 decision to increase long-dated debt buybacks as an important catalyst.

    The Treasury doubled the maximum size of certain long-end liquidity-support buybacks from $2 billion to at least $4 billion per operation. The announcement was followed by falling long-term yields and an 8.2% Bitcoin advance from an intraday low near $64,100 to approximately $69,500 in less than 12 hours.

    Sticco said Bitcoin’s close relationship with software stocks during the move showed how closely cryptocurrency had become linked to U.S. macroeconomic conditions. As interest-rate expectations later changed and short-term yields rose, Bitcoin surrendered some of its gains even though the legislative situation in Washington had not materially changed.

    Congress represents another variable for U.S. investors. Sticco pointed to the CLARITY Act, which would establish a statutory division of responsibilities between the SEC and CFTC for parts of the digital asset market. The legislation would also create a federal framework affecting exchanges, brokers, dealers and custody services.

    The Senate Banking Committee advanced the legislation by a 15-9 vote in May, with Democratic Sens. Ruben Gallego and Angela Alsobrooks joining Republicans. Sticco, who attended the markup as part of Cryptex’s policy work, said both Democrats made clear at the time that their committee votes did not guarantee support on the Senate floor without progress on unresolved provisions.

    A Sept. 15 cloture vote requires 60 votes to move the legislation forward. Previous coverage of the negotiations identified ethics rules, stablecoin rewards and financial-crime provisions as issues that remained unresolved ahead of the procedural vote.

    For regulated index products, Sticco highlighted provisions covering CFTC registration for digital commodity exchanges, brokers and dealers. He said capital, asset-segregation, surveillance and customer-protection requirements could increase the number of regulated venues capable of supporting assets used in exchange-traded products.

    Sticco also cited custody provisions and changes affecting financial holding companies as potentially important for institutions. He argued that statutory classification of digital assets would give index providers greater certainty than relying on agency interpretations that future regulators could change.

    Policy expectations have weakened even as cryptocurrency prices have risen. Sticco said Polymarket odds for the CLARITY Act becoming law in 2026 had fallen from approximately 82% in February to around 25% in late August, while Galaxy Research placed the probability closer to 10%.

    The Sept. 15 vote will also take place on the first day of the Federal Reserve’s Sept. 15-16 meeting, putting two major U.S. policy events in the same period.

    According to Sticco, unresolved Senate negotiations include ethics and conflict-of-interest rules involving government officials, possible secondary enforcement authority for state attorneys general, illicit-finance provisions and banking-industry objections to crypto exchanges paying yield on stablecoin balances.

  • Bitcoin Needs Sustained ETF Demand as Fed Rate Hike Risks Grow, Analysts Say

    Bitcoin Needs Sustained ETF Demand as Fed Rate Hike Risks Grow, Analysts Say

    Bitcoin’s August rally is facing a tougher test as investors assess whether sustained spot exchange-traded fund (ETF) demand can offset rising expectations of a September Federal Reserve rate hike.

    Bitfinex analysts said in an Aug. 31 market report shared with crypto.news that Bitcoin’s latest advance has increasingly been driven by spot buying rather than excessive leverage. That could leave the market better positioned to absorb selling even as U.S. monetary conditions become less supportive.

    Bitcoin ($BTC) was trading near $78,700 at the time of writing, down about 0.4% over 24 hours, according to crypto.news data. The cryptocurrency briefly climbed above $81,000 last week before falling to $76,857 after Federal Reserve Chair Kevin Warsh used his Jackson Hole address to signal that interest rates may still need to rise.

    The decline interrupted a rally that lifted Bitcoin from below $65,000 in mid-August to above $80,000. As previously reported by crypto.news, Bitcoin gained about 24% during the preceding week as Treasury buybacks, ETF demand and forced short covering fueled the recovery.

    Bitcoin ETF demand faces a tougher test

    Bitfinex analysts said the derivatives market has not displayed the rapid leverage buildup typically associated with an overheated rally. Bitcoin open interest stood at $55.6 billion, more than 20% above its level at the start of August, but the increase has been gradual and basis levels have remained relatively low.

    “We are in a market driven by spot buying and, notwithstanding large short liquidations, open interest has only gradually increased, while basis has remained relatively low and at healthy levels historically,” the analysts said.

    According to the report, Bitcoin holding the $77,100 level, which Bitfinex identified as important lower-timeframe support, alongside continued spot buying would suggest that market conditions remain relatively balanced.

    ETF flows offer another indication of whether that demand can continue. U.S. spot Bitcoin ETFs absorbed about $3.04 billion during nine consecutive positive sessions from Aug. 17 through Aug. 27, according to Bitfinex. Friday marked the first net outflow in 10 sessions, with investors withdrawing $201.9 million as Bitcoin reversed from above $81,000.

    Despite those redemptions, the funds recorded $924.5 million in net inflows for the week. Inflows over the preceding two weeks totaled about $2.8 billion.

    BlackRock’s IBIT accounted for just $33.4 million of Friday’s withdrawals after attracting roughly $2.3 billion during the previous nine sessions. ARKB and BITB recorded a combined $164.6 million in outflows.

    Institutional demand has also absorbed Bitcoin sold by larger holders, Bitfinex said. Whale addresses holding between 1,000 and 10,000 $BTC reduced their balances by 50,500 $BTC since the end of June, while institutional custodial holdings associated with exchanges and ETF platforms increased by 59,100 $BTC.

    During the latest August advance, custodial balances rose by 31,500 $BTC, closely tracking ETF inflows, according to the analysts.

    “While whales took profits during the rally, institutional demand absorbed that supply, indicating that assets moving into these regulated vehicles may be less prone to sudden liquidation on the basis of short-term macroeconomic news.”

    $80K–$83K could test the strength of real demand

    Jeff Ko, chief analyst at CoinEx, told crypto.news that part of Bitcoin’s August rally resulted from Treasury buybacks pushing yields and the dollar lower while traders held large short positions.

    Ko said the mechanical portion of the resulting short squeeze has now “largely played out,” making spot demand increasingly important around $80,000.

    “Treasury buybacks pushed yields and the dollar lower, and that impulse collided with crowded short positioning to produce the squeeze,” Ko said. “What matters from here is whether spot buyers keep absorbing supply around $80K.”

    The Treasury catalyst had already produced a sharp market response earlier in August. On Aug. 19, the department announced that it would at least double the maximum size of liquidity-support buybacks for 10-to-20-year and 20-to-30-year nominal coupon securities from $2 billion to at least $4 billion per operation from Sept. 9 through Nov. 4.

    The change helped compress long-term yields as Bitcoin surged. An Aug. 20 analysis of the buybacks found that $BTC rose 8.2% from an intraday low of $64,100 to $69,500 within 12 hours of the Treasury announcement, while $1.44 billion in short positions were liquidated.

    Ko views the $80,000–$83,000 range as more than a technical resistance zone. The area could reveal whether new investment can replace the buying pressure previously generated by forced short covering.

    “It is a major supply zone, and the point at which the rally stops being a short squeeze and becomes a test of real capital allocation.”

    Ether could provide another signal of broader cryptocurrency risk appetite. Ko said ETH traded near $2,490 heading into Jackson Hole but subsequently lagged Bitcoin in price performance. If Treasury yields and the dollar remain elevated while Ether begins outperforming Bitcoin in both price and investment flows, he would view that as evidence of stronger crypto demand.

    Bitfinex also identified Ether ETFs as a potential demand gauge. U.S. spot Ether products attracted $815.7 million last week, extending their positive streak to 10 sessions, according to the firm. Nearly 12.3% of cumulative Ether ETF inflows since launch arrived during August, while demand adjusted for the relative size of the assets was roughly four times stronger than Bitcoin ETF demand during the past week.

    Fed rate hike risk threatens Bitcoin’s liquidity support

    Bitcoin is now facing pressure from a less favorable interest-rate outlook. Warsh’s Jackson Hole remarks lifted the market-implied probability of a September rate increase to about 57%, according to Bitfinex.

    Ko said CME-implied odds rose from 39.9% on Aug. 21 to 57% following the speech. The two-year Treasury yield moved to around 4.31%, while the dollar returned toward a two-week high.

    Bitfinex analysts said persistent inflation remains a key obstacle to easier monetary policy. Headline Personal Consumption Expenditures inflation stood at 3.7%, with core inflation at 3.3%, while private domestic demand expanded at a 4.2% annualized pace during the second quarter.

    Jeff Mei, chief operating officer of BTSE, told crypto.news that Warsh’s speech raised the hurdle for Bitcoin because higher interest rates could reduce the liquidity available to cryptocurrency assets.

    “For a sustained rally, we need a few things to happen. First, ETF demand has to stay strong across all ETF products, and not just BlackRock’s IBIT ETF. Second, we need better inflation data for the Fed to back off and keep rates steady.”

    Mei also warned that the boost from Treasury buybacks could fade quickly. Earlier in August, Bitcoin broke above $76,000 as ETF inflows accelerated alongside improving U.S. liquidity conditions. Spot Bitcoin ETFs attracted $606 million on Aug. 20 alone, extending the institutional demand that accompanied the recovery from mid-August lows.

    U.S. economic data could shape Bitcoin’s next move

    Market attention is turning to a series of U.S. economic releases that could change interest-rate expectations before the Federal Reserve’s September meeting.

    Ko identified Friday’s August payroll report as the most important immediate event and the final jobs report before the FOMC decision. July payrolls fell by 23,000 compared with an 80,000 consensus estimate, while May and June payrolls were revised lower by a combined 103,000 jobs, according to figures cited by Ko. The unemployment rate currently stands at 4.1%.

    Before the payrolls report, ISM Manufacturing and JOLTS data are due Tuesday. ADP employment figures and the Federal Reserve’s Beige Book are scheduled for Wednesday, followed by ISM Services data on Thursday. Bitfinex analysts also identified the August labor-market and inflation reports as the next major tests for rate expectations.

    The August inflation report is scheduled for Sept. 11, placing another important data release immediately before the Sept. 15–16 FOMC meeting.

    Ko also pointed to the CLARITY Act as a crypto-specific U.S. catalyst, with a Senate procedural vote currently scheduled for Sept. 15. He considers the vote one of the largest asset-specific events on the September calendar, while the Federal Reserve meeting will determine the monetary backdrop for Bitcoin and other risk assets.

    For Bitcoin’s price, Mei sees $87,000 as the next level that would materially strengthen the bullish case after the cryptocurrency clears nearer resistance zones.

    “If we break the $87k mark and hold, $100K becomes the real target, and we could be looking at a bull market.”