Bitcoin and Ether rebound as ETF inflows return

Bitcoin and Ether bounced from recent lows on July 3, giving crypto investors a relief rally after a rough stretch. The move matters for everyday investors because it came alongside renewed buying in US spot Bitcoin exchange-traded funds, a regulated wrapper that lets investors get Bitcoin exposure through traditional brokerage accounts.

Cointelegraph reported that Bitcoin climbed to within $50 of $63,000 on July 3, after falling days earlier to a 21-month low. Ether rose to $1,775, according to Cointelegraph, after dropping to fresh year-to-date lows.

The broader mood was still sour. The Crypto Fear & Greed Index from Alternative.me showed a reading of 11 out of 100, a level labeled “Extreme Fear.” The index is a sentiment gauge that tracks whether crypto traders appear more nervous or more aggressive based on market inputs.

ETF flows flipped positive

The sharpest shift came from the Bitcoin ETF market. US spot Bitcoin ETFs recorded $221.7 million in net inflows on July 2, according to SoSoValue data cited by Cointelegraph. Net inflow means more money entered the funds than left them.

Cointelegraph said that was the largest single-day inflow since early May and ended a run of 10 straight days of outflows. For retail investors, ETF flows are useful because they show demand from investors using traditional market products, rather than only activity on crypto exchanges.

Spot Bitcoin ETFs hold Bitcoin directly and issue shares that trade like stocks. When these funds see inflows, issuers may need to acquire more Bitcoin to back shares, which can add buying pressure. Outflows can have the opposite effect if funds need to sell or reduce holdings.

Derivatives added another layer

Cointelegraph also pointed to activity in futures markets, where traders use contracts tied to future crypto prices. Funding rates for Bitcoin have been positive for eight days, according to Hyblock data cited by Cointelegraph.

Funding is a recurring payment between traders in perpetual futures, a type of futures contract with no expiration date. When funding is positive, traders betting on higher prices pay traders betting on lower prices. That usually signals the market is leaning toward bullish positioning.

Hyblock data cited by Cointelegraph also showed Bitcoin open interest near its highest level in several days. Open interest means the total value of outstanding derivatives positions that have not been closed.

That setup cuts both ways. More open interest can show stronger participation, but Cointelegraph noted that leverage rising while price moves mostly sideways is often treated as a caution sign. Leverage means traders are using borrowed funds or margin to increase the size of a position, which can make price swings more forceful if positions are closed quickly.

Levels traders are watching

Cointelegraph identified roughly $61,000 as a key Bitcoin area because Hyblock data showed a large cluster of leveraged long positions there. A long position is a bet that the price will rise. If price falls into heavily leveraged long positions, forced selling can occur when traders no longer have enough margin to support those bets.

On the upside, Cointelegraph said a move above $62,500 would bring Bitcoin closer to zones where leveraged short positions become more vulnerable. A short position is a bet that price will fall, and short sellers can be forced to buy back exposure if price rises against them.

The current read is mixed. ETF demand improved, Bitcoin and Ether recovered from recent lows, and futures traders remain tilted toward higher prices. At the same time, Cointelegraph said thin holiday-weekend trading in the US and elevated leverage could leave the market more fragile than the rebound alone suggests.

This story draws on original reporting from Cointelegraph.