Bitcoin’s return above $70,000 is doing more than reviving the crypto trade. It is also putting spot Bitcoin ETFs back in focus, as a sharp reversal in fund flows suggests institutional demand may be returning.
Bitcoin climbed more than 3% Thursday to touch $72,000, its highest level since June 1, according to Bloomberg, extending a roughly 7% gain from Wednesday. The rally followed the U.S. Treasury’s decision to expand purchases of longer-dated government bonds, pushing Treasury yields lower and the dollar to a three-month low.
The combination created a more favorable backdrop for Bitcoin. Lower yields reduce the relative appeal of fixed-income assets, while a weaker dollar supports the appeal of dollar-priced alternative assets. Bitcoin then got an additional boost from a major short squeeze, with more than $2.7 billion in crypto shorts liquidated over 24 hours, according to Bloomberg.
Confirmation Coming from the ETF Market
U.S. spot Bitcoin ETFs attracted $517.2 million on Wednesday, their biggest single-day inflow since May 4, according to data by SoSoValue.
BlackRock’s iShares Bitcoin Trust (NASDAQ:IBIT) led the rebound. The fund attracted roughly $284.7 million on Wednesday, while Fidelity Wise Origin Bitcoin Fund (BATS:FBTC) and ARK 21Shares Bitcoin ETF (BATS:ARKB) also posted significant inflows.
That marks a notable reversal after spot Bitcoin ETFs lost nearly $390 million during the week ended Aug 14, per SoSoValue.
IBIT is particularly important because of its scale. BlackRock’s fund had nearly $51.3 billion in net assets as of Thursday, and its stated objective is to reflect the performance of Bitcoin.
The Macro Catalyst Could Be Bigger Than the Price Move
The Treasury announcement may be the more durable catalyst.
The department plans to increase buybacks of longer-term Treasury securities, with the size of certain operations rising from $2 billion to at least $4 billion. The move came after the 30-year Treasury yield reached its highest level since 2007.
The initial reaction was exactly what Bitcoin bulls wanted: yields fell, the dollar weakened and liquidity-sensitive assets rallied.
But investors should watch whether those conditions persist. The Treasury buyback does not eliminate the underlying fiscal pressures driving long-term yields, and JPMorgan strategists have warned the policy could ultimately have the opposite effect if concerns over deficits of around 6% of GDP, and debt supply remain unresolved, per MarketWatch.
IBIT, FBTC and BTC Face a Bigger Test
For Bitcoin ETFs, the next test is whether the recent inflows accelerate as Bitcoin holds above $70,000.
IBIT is the obvious institutional bellwether, while FBTC offers another large spot-Bitcoin vehicle. The broader ETF group could also benefit if the rally expands beyond a short-covering event.
The setup is therefore becoming unusually clear: falling yields + weaker dollar + improving crypto policy sentiment + renewed ETF inflows.
If those forces remain aligned, Bitcoin’s $72,000 breakout could prove to be less of a crypto-price story and more of an ETF demand story.
The catch? Much of Thursday’s move was fueled by forced short covering. Investors will want to see sustained spot ETF creations, not just liquidations, before declaring the Bitcoin ETF comeback fully underway.
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