The ETF saw net inflows for the first week at last, but the CPI big test is coming up next.

Author: Blockchain Knight; Source: X, @Knight_in_Block

Last week, the Bitcoin price stabilized and rebounded, crossing the 64,000 level. Even if the Middle East powder keg flares up again, it has not shown any obvious impact on the rebound process.

Behind this round of rebound are both liquidity support from U.S. spot Bitcoin ETF inflows—ending eight consecutive weeks of net outflows—and market bargaining over expectations for a shift in Federal Reserve policy. But in terms of the strength of the funds and the macro environment, the rebound’s foundation is still not solid. The June CPI data to be released this week will become a key turning point in determining whether the rally can continue.

On the liquidity front, the 13 U.S. spot Bitcoin ETFs recorded a combined net inflow of $197 million in a single week, officially ending the prior net outflow state that had totaled more than $8 billion across the previous eight weeks.

Looking at the single-day structure, the main contributions came from Monday’s inflow of $265 million and Friday’s inflow of $90.4 million. During midweek—on Wednesday and Thursday—there were net outflows of $84.8 million and $95 million, respectively. The timing of capital entering the market has therefore not been consistent.

In addition, spot Ethereum ETFs also recorded a net inflow of $84.42 million, while simultaneously ending an eight-week streak of consecutive declines, reflecting that the overall pace of selling across the entire crypto market has slowed down.

That said, it is necessary to be clear that a one-week turnaround in funds does not mean a reversal in the institutional demand trend.

On one hand, the scale of the eight-week cumulative outflows was huge, and a single week of positive inflows has not yet reversed the downward trend in ETFs’ cumulative holdings.

On the other hand, the current pace of capital accumulation is still too weak; it is more like a pause in selling in stages rather than a large-scale entry of incremental capital.

Market observers note that the speed at which the Bitcoin price stabilized is clearly faster than the pace of ETF demand recovery. In other words, the magnitude of this round of price rebound has already exceeded the level that current ETF capital inflows can support. If there is no continued capital to absorb the selling afterward, there is a risk of a pullback.

Some institutions also believe that although the biggest wave of ETF selling during this bear market has already come to an end, the market still lacks strong institutional confidence to support it.

From the derivatives market perspective, current Bitcoin futures open interest is close to $47.3 billion. The funding rate is slightly positive, and recent liquidations have been dominated by shorts. This suggests the market is making tentative positioning moves, but overall long exposure remains fairly restrained. It indicates that buyers have not fully stepped in; the rebound is driven more by short covering and sentiment repair rather than by incremental capital pushing the move.

And more importantly, at the macro level, the CPI data expected to be released on the evening of July 14 is the next major test facing the rebound setup.

The market currently shows clear differences in views regarding the Federal Reserve’s policy path.

According to the CME Fed Watch tool, the probability that the July meeting will keep interest rates at 3.50%-3.75% is about 65%. But by September, the probability that rates rise to 3.75%-4.00% has already exceeded 50%.

Meanwhile, the direction of inflation data will directly determine how strong expectations for Fed rate hikes are—then, through U.S. Treasury yields and the U.S. dollar index, it will transmit into the crypto market.

At the same time, this Tuesday and Wednesday evening, the Federal Reserve’s new chair, Woshi, will attend two hearings, respectively, mainly to testify on monetary policy. Perhaps her remarks on the current monetary policy at that time will also directly affect the market—so this is worth paying attention to as well.

Of course, don’t forget the Middle East narrative. The current state of fighting has made financial markets feel worn out, but the Strait’s passage conditions have a tangible, real impact on oil—and in the long run, that is not a good thing.