Bitcoin ETF inflows suggest institutions are returning, but weak on-chain activity shows the market remains hesitant to join the recovery.
U.S. spot Bitcoin ETFs have returned to inflows, suggesting institutions are coming back even as weak on-chain activity shows broader market demand continues to lag.
Bitcoin recovered toward $64,000 after its latest sell-off, but spot trading volume fell 21.5%, according to a report by blockchain analytics firm Glassnode.
Net market buying also turned negative, meaning the price advanced despite sellers becoming more aggressive than buyers on spot exchanges. As the analysts argue, the combination suggests the recovery “has been driven by relatively thin liquidity rather than broad-based buying conviction.”
According to SoSoValue, spot Bitcoin ETFs drew more than $197 million last week after investors pulled over $526 million during the first week of July.
The return of U.S. spot Bitcoin ETF inflows offered a more encouraging signal after weeks of withdrawals and suggested larger, longer-term investors may be coming back, Glassnode notes.
As Bitcoin Foundation reported, June was the worst month in all history of spot Bitcoin ETFs. Still, ETF trading volumes also slowed, pointing to a cautious return rather than institutions rushing to make large bets.
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ETF Inflows Improve, but the Network Stays Quiet
Activity taking place directly on the Bitcoin network remained subdued despite the higher price.
The number of active Bitcoin addresses continued to decline, while transaction fees generated by the network also moved lower:
“On-chain activity remains subdued. Active addresses and fee generation continue to trend lower, highlighting weak organic network demand despite higher prices.”
At the same time, more short-term money has started moving into Bitcoin. That kind of capital tends to react quickly to price swings and has often been linked to more volatile trading.
Still, the greater portion of Bitcoins is owned by long-term hodlers, meaning that only a minor percentage of them is under the control of speculators. This implies that there may be no excessive selling in case of a temporary increase or decrease in prices, per the report.
According to Glassnode, the Bitcoin market is now experiencing a period of consolidation. Despite the positive impact of ETF inflows on the market, low trading volumes and low activity in the network imply that the recovery process is yet to succeed.
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Source: Original Article
