Is Bitcoin seeing a bottoming signal? Spot ETF ends eight-week "bleeding" streak: net inflows for two consecutive weeks, but geopolitical risks and regulatory uncertainty still suppress rebound

According to Zhitong Finance APP, after a record-breaking two-month streak of capital outflows, U.S. spot bitcoin ETFs have finally seen a continuation of net inflows. Over the past two weeks, the 13 spot bitcoin ETFs recorded a combined net inflow of approximately $273 million, ending a previous eight-week streak of over $8 billion in outflows. This reversal happened amid escalating U.S.-Iran military conflict and extreme pressure with a single-day outflow as high as $425 million on Monday, viewed as a key signal that the crypto market may be bottoming out.

Nonetheless, the scale of inflows remains minor compared to prior outflows. Under the combined weight of inflation concerns triggered by geopolitics, repeated Fed rate hike expectations, and deadlocked critical U.S. crypto legislation, bitcoin prices continue to struggle inside the $60,000–$65,000 range.

Capital Reversal: From $1.79 Billion Weekly Outflows to Two Consecutive Weeks of Net Inflows

The strength of this capital flow reversal stands in stark contrast to previous outflows. Over the eight consecutive weeks of fund flight, investors withdrew more than $8 billion from bitcoin ETFs. In the week ending June 26 alone, net outflows reached $1.79 billion, the second highest on record. Total cumulative ETF net inflows plunged from $59.34 billion down to $51.08 billion.

The reversal started in mid-July. Over the past two weeks, bitcoin ETFs logged a combined net inflow of about $273 million. Considering the daily data: $181 million flowed in on Tuesday, $107.8 million on Wednesday, $79.15 million on Thursday, and $132.3 million on Friday—a streak of four consecutive trading days with net inflows.

More noteworthy is the breadth of capital distribution. Santiment data shows returning demand is not concentrated in a single product but is dispersed across multiple issuers. Fidelity's FBTC contributed the most in the early rebound phase, absorbing around $166 million; ARKB registered about $91.8 million in net inflows; thereafter BlackRock's IBIT saw a single-day inflow of $138.9 million. This broad-based improvement across multiple funds weakens the "purely technical inflow" argument and better reflects renewed institutional participation.

Meanwhile, spot ethereum ETFs performed even more impressively. Last week saw a net inflow of $105.4 million, extending the prior week's $84.42 million momentum. Ethereum ETFs had also suffered eight consecutive weeks of outflows, with cumulative losses exceeding $1.1 billion.

Richard Galvin, Executive Chairman of crypto investment firm DACM, stated: "Given the scale and coverage of ETFs, they have become a good gauge for bitcoin and overall sector sentiment. After eight straight weeks of declines, confirmation within two weeks is a positive signal."

Technical Rebound: Bitcoin Regains 200-Week Moving Average, But Still Halved from All-Time High

Bitcoin has climbed back above its 200-week moving average, which currently sits around $63,300—and is viewed as a critical separator of bull and bear markets over the long term. For weeks, macroeconomic uncertainty has kept bitcoin trapped in the $60,000 to $65,000 range.

Even following a fresh round of U.S. air strikes on Iran, bitcoin displayed resilience in Asian markets, briefly touching $65,000 in early trading on July 20. As of the Asian open, bitcoin stood at roughly $64,725.

However, on a longer time frame, bitcoin remains down about 50% from its all-time high of $126,000 set in October 2025. Year-to-date losses in 2026 still stand at 26%. Technically, the 4-hour chart shows wide, oscillating upward movement, but no clear directional trend. The zone around $65,600 serves as critical resistance; failure to break above with volume could trigger a pullback.

Dual Macroeconomic and Geopolitical Pressures: U.S.-Iran Conflict Fuels Inflation Fear, Rate Hike Expectations Swing

The significance of this capital reversal lies in its occurrence amid a double headwind of geopolitics and macroeconomics. On July 7, U.S. Central Command announced the completion of another large-scale strike on Iran, hitting over 80 targets, including Iranian air defense systems, command and control networks, and more than 60 Islamic Revolutionary Guard Corps speedboats. The U.S. military has continued targeting Iranian positions, carrying out attacks for eight consecutive nights as of July 20. As tensions rose, Brent crude has returned above $90 per barrel.

Tension in the Strait of Hormuz has directly pushed oil prices higher, stoking inflation fears. Historically, escalation in this region typically triggers classic investor responses—reducing exposure to risk assets and shifting into traditional safe havens like oil and gold. Damien Loh, Chief Investment Officer at Ericsenz Capital, commented: "The significance of the U.S.-Iran conflict is that it pushes interest rates higher, and rates impact all risk assets."

Since the beginning of 2026, the Fed has kept rates in the 3.5%–3.75% corridor. Although June U.S. CPI came in below expectations—a 0.4% month-on-month decline, the sharpest drop since April 2020—pushing July rate hike odds as low as 15.5%, geopolitical-driven inflation risk saw hike expectations rebound, and CME FedWatch data showed July hike odds spiking up to 46.5%. By July 20, the probability had retreated to about 14%.

"The possibility of the Fed hiking rates may have deterred institutional capital from fully returning," Loh added.

Regulatory Variable: "CLARITY Act" Stalled in Senate, Passage Odds Only 38%

The market's other eagerly anticipated catalyst—the U.S. crypto market structure "CLARITY Act"—remains stuck in the Senate. The act passed the House in July 2025 by 294–134 and was greenlit by the Senate Banking Committee on May 14, 2026, by a 15–9 bipartisan vote. However, with only about 20 working days until the Senate recesses around August 7, the bill has yet to go to a floor vote.

According to Polymarket data, the bill's chance of passage in 2026 is just 38%. Republicans hold 53 seats, but at least two Republican senators are expected to vote no, so party leaders would need at least seven Democrats to cross the aisle to reach the required 60-vote cloture threshold. Four issues remain unresolved: ethical clauses for officials' crypto holdings, law enforcement objections to Section 604's non-custodial developer protections, banking sector opposition to stablecoin yield loopholes, and vacant CFTC commissioner seats.

Loh noted that if the bill passes before the August recess, it could serve as a catalyst for bitcoin price appreciation. However, as the time window keeps shrinking, hopes are fading fast.

It is noteworthy that bitcoin itself has already been classified as a commodity by both the SEC and CFTC, so it does not rely on the CLARITY Act for regulatory clarity. This makes bitcoin a primary hedge asset among cryptocurrencies, compared to alternatives like XRP and Solana that still face regulatory uncertainty.

The Largest Corporate Holder—Strategy's Paradox: First Major Sell-Off Shakes the Narrative

While ETF capital is returning, another key variable is brewing—the world's largest corporate bitcoin holder, Strategy (MSTR.US), is wavering on its long-held "never sell" pledge.

Since Strategy disclosed its first sale of a small amount of bitcoin since 2022 in early June, bitcoin has fallen about 10%. On July 6, Strategy revealed it had sold 3,588 BTC, raising around $216 million to pay preferred share dividends and boost cash reserves. This marks the first significant voluntary reduction since the company began large-scale accumulation in 2020. As of July 5, the company's bitcoin holdings had dropped to 843,775 BTC.

This move carries several significant implications. First, despite having about $2.55 billion in cash, the company chose to sell coins instead of raising funds through additional common share issuance— diverging from its historic approach. Second, the core investment narrative of "per-share bitcoin increase" is now broken. Third, market fears have heightened over a potential systemic sell-off crisis if cash flows dry up—the company faces $1.8 billion in annual dividend and interest obligations, and the shareholder-approved quota to sell up to 20,000 bitcoins will likely be fully utilized.

Strategy's core valuation metric, mNAV, has dropped below 1, meaning the company's market cap now trails the value of its bitcoin holdings. Its share price is down roughly 75% over the past year. Founder Michael Saylor, who once positioned the company as a "never seller" of accumulated bitcoin, has now indicated a willingness to sell when necessary.

Bottoming or a Bull Trap?

Two consecutive weeks of ETF net inflows, bitcoin reclaiming the 200-week average, and Asian markets showing resilience despite geopolitical conflict—all these signals together paint a cautiously optimistic bottoming narrative.

However, caveats remain. The $273 million inflow over two weeks stands in sharp contrast to $8 billion in outflows over the previous eight weeks. Analysts note cumulative net inflows for bitcoin ETFs in 2026 are still negative, around minus $5.4 billion. Crypto research firm BRN wrote in a report: "First, monitor ETF flows. Several weeks of positive trends would signal that institutional money is returning to the market in a structured way."

On the macro front, the market is closely watching whether the long-awaited Market Structure Bill (Clarity Act) will pass before the U.S. Congress recesses in August. If it does, it could be a catalyst for bitcoin's appreciation. Until then, whether bitcoin can hold support amid escalating U.S.-Iran tensions and Fed policy uncertainty will determine if this "bottoming bounce" is in fact a real trend reversal—or just another brief noise event.

Bitcoin stands at a critical crossroads. Whether the $65,600 resistance can be convincingly broken will decide if this rally is a true reversal, or just a "dead cat bounce." The July 29 Fed rate decision, the legislative window before the August 7 Congressional recess, and Strategy’s next moves on its holdings will be the core factors to watch over the next few weeks.