Bitcoin Hits $66K as ETF Inflows Offset Liquidity Gaps and Oil Risks

Woofun AI reports that Bitcoin breached the $66,000 threshold, extending its advance as exchange-traded fund inflows and a sharp drop in balances on major crypto exchanges eased some of the selling pressure that has weighed on the market since May.

The cryptocurrency traded as high as $66,277 and was changing hands near $66,181 as of press time, representing a gain of approximately 3.3% from its previous close. These liquidations helped amplify the price move as exchanges automatically closed positions that could no longer meet margin requirements.

However, the size of the wipeout does not establish whether the rally was led by durable spot-market demand or by traders unwinding leveraged bets. The streak, the longest since early May, marked a shift from the persistent withdrawals that accompanied Bitcoin’s second-quarter decline.

Simon-Peter Massabni, head of business development at XS.com, noted that the renewed inflows have helped support Bitcoin after several previous recovery attempts lost momentum when ETF demand quickly faded. Still, five positive sessions are not enough to establish that institutional investors have shifted from intermittent buying toward sustained accumulation. The recent inflows also recover only a fraction of the capital that left crypto investment products during the preceding two months.

Bitcoin and Ether funds recently ended eight weeks of combined outflows totaling about $9.46 billion. Massabni said Bitcoin would need to attract capital at a faster pace and over a longer period to sustain the upward move and recover more of the ground lost during the recent selloff. That leaves the rally's durability dependent on whether the current streak develops into materially stronger and more persistent demand.

Binance accounted for roughly $570 million of the total, its largest daily net outflow since April. Bybit recorded about $65 million in withdrawals, while Coinbase and HTX posted outflows of approximately $48 million and $3 million, respectively. Moving Bitcoin away from exchanges can reduce the amount immediately available for sale, particularly when withdrawals occur across several trading platforms at the same time.

Woofun AI data shows that if the coins remain outside exchange wallets, the decline in available supply could help limit short-term selling pressure. Bitcoin’s 30-day exchange net-flow indicator remains close to its baseline and continues to show a slight bias toward inflows. That means the July 20 withdrawals have not been large or persistent enough to reverse the broader trend. Adler also noted that the deep and sustained exchange outflows associated with accumulation periods in 2023 and 2024 remain absent.

As long as the indicator stays near or above its baseline, a substantial amount of Bitcoin remains on exchanges and available for sale.

Moreover, the buy side presents an additional constraint. Stablecoins represent much of the readily available capital traders use to purchase Bitcoin. Their continued withdrawal therefore weakens the market’s ability to absorb supply and support repeated advances.

That shortage of purchasing power may become more important as Bitcoin’s rebound puts recent buyers back into profit. The reading is not yet at levels normally associated with an overheated market.

However, the shift above neutral removes some of the pressure that previously discouraged short-term holders from selling and increases the possibility of profit-taking if the recovery begins to lose momentum.

Taken together, the indicators show a market benefiting from lower immediate sell-side pressure while still lacking a comparable improvement in buying liquidity. That imbalance could become more consequential if profitable short-term holders begin supplying coins back to the market before stablecoin inflows recover. That leaves the Strait of Hormuz at the center of the market’s concerns.

Although commercial vessels continue to transit the waterway, flows remain well below their pre-war levels, keeping a significant portion of Persian Gulf energy exports vulnerable to further disruption. Oil markets have begun pricing these events as Brent crude fell about 2% to $88 a barrel as traders assessed the proposed ceasefire. A prolonged energy shock would complicate the outlook for interest rates by raising transportation, production and consumer costs at a time when markets are already sensitive to inflation.

Higher inflation expectations could keep government bond yields and borrowing costs elevated, reducing the pool of speculative capital available to Bitcoin and other risk assets. That creates an additional hurdle for a Bitcoin market already showing limited stablecoin purchasing power. While the latest rally may be benefiting from ETF inflows and reduced near-term exchange supply, another sustained rise in oil prices could make the external liquidity environment less supportive just as Bitcoin needs stronger demand to extend its recovery.

The move above $66,000 has pushed Bitcoin further away from the lower end of that range, but the asset would still need to gain roughly another 9% to reach the level Adler associates with a broader recovery. Yet stablecoin flows continue to show limited purchasing power, while the threat of higher oil prices keeps the external liquidity backdrop uncertain. That leaves the rally in a stronger position than it was earlier in July, but still without the combination of sustained capital inflows and improving macro conditions that would provide clearer confirmation of a lasting breakout.