Key Insights:
- Bitcoin ETFs recorded their best single day in two months, breaking a 10-session outflow streak.
- The $281 million short squeeze wiped out a large amount of bearish positions.
On July 2, Bitcoin funds recorded a fresh inflow of $221.7 million. This single day marked the highest inflow in 2 months and the first day of net positive flows after 10 consecutive days of outflows totaling $2.73 billion, according to SoSoValue data.
Bitcoin pushed up to $62,145, its highest point in two weeks. The gains were spread across the market rather than limited to Bitcoin alone, with Ethereum, Solana, and XRP also posting decent gains. That made July 2 the strongest session for crypto markets in several weeks.
How Short Squeeze Moved the Market This Way
On July 2, a Short Squeeze setup forced the closing of around $281 million in short positions. That’s nearly double the closings in long positions, which accounted for $159 million. In total, this event triggered more than 95,000 liquidation events, according to Coinglass data.
The single largest forced liquidation was the $18.2 million Ethereum position on the derivatives platform Hyperliquid. Also, Ethereum accounted for $157 million in short closures that day, more than Bitcoin’s $103 million.
Bitcoin usually dominates these figures. So, that gap signals Ethereum had heavy short buildups before the move began.
A separate development compounded that move. Fresh U.S. jobs data for June came in weaker than forecast. This reduced the chances of further Fed rate hikes.
Lower expectations of rate increases usually support asset prices broadly, as they put pressure on the dollar index. The jobs report made it much harder for short sellers to hold their positions as broader crypto prices rallied.
Understanding Bitcoin ETF Flows
The $221.7 million inflow on July 2 recorded the largest single-day inflow figure since early May. Ending a streak of 10 consecutive days of outflows, which accounted for an outflow of $2.73 billion in total.
Fidelity’s FBTC fund experienced the highest inflow, recording $165.96 million. ARK Invest’s ARKB added $91.84 million. VanEck’s HODL added $4.35 million.
However, BlackRock’s IBIT, the largest Bitcoin fund by total assets, moved in the opposite direction. It recorded a $40.43 million outflow while most of its peers recorded large inflows, according to SoSoValue data.
That IBIT outflow figure is worth analyzing, as it marks the best ETF day in two months. The flows were not moving in a uniform direction. The main question is whether these inflows will continue over the coming weeks.
Bitcoin ETFs net outflows for the year are still sitting at $5.4 billion, according to CoinDesk. One strong day does not change that figure. Sustained inflows over multiple sessions have historically led to a genuine market recovery rather than a single strong day.
What Two Institutional Views Add to the Picture
Two different institutional views were published near Thursday’s session, making this data more insightful.
Bitwise CIO Matt Hougan argued in a written analysis, as reported by CoinDesk. According to him, the recent pressure in Strategy’s preferred stock market was a major concern throughout crypto’s June decline. However, it signals a market bottom rather than a structural breakdown.
JPMorgan briefed on a different approach in a research note cited by CoinDesk. The bank pointed to another risk. Strategy may sell Bitcoin under certain conditions. If Bitcoin rises further, the company could sell more BTC from its holdings. That could limit Bitcoin’s upside.
Do Bitcoin ETFs Inflows Confirm a BTC Recovery?
The data as of July 3 does not support a confirmed recovery of Bitcoin prices. Short squeezes may push prices higher, but the rally they generate is mechanical, coming from forced position exits rather than fresh capital flowing in at current prices.
Once short positions are squared off, the upward pressure ends. The next move depends on whether sustained buying from investors keeps prices supported.
The ETF inflows on July 2 represent the most direct sign of fresh capital flowing in. But one positive day, even against $5.4 billion in year-to-date net outflows, may not confirm a trend reversal.
The Federal Reserve’s rate path, the dollar’s direction, and uncertainty around U.S. crypto legislation and geopolitics remain the bigger catalysts. Thursday’s jobs report was only a minor catalyst, but it still proved positive for BTC.
