Bitcoin Rallies Above $77,000, But US Spot ETFs Are Bleeding Funds – What’s Driving the Surge?

Bitcoin has staged a notable comeback, recently breaching the $77,000 mark in Asian trading on September 18th, showcasing resilience despite a hawkish stance from the Federal Reserve and a legislative setback. As of writing, CoinGecko’s latest prices show Bitcoin hitting a peak of approximately $77,024 over the past 24 hours, settling around $76,500, still up about 1% intraday. This marks a significant recovery from its dip to around $75,000 on September 15th.

However, a curious contradiction is emerging: while BTC prices climb, US spot Bitcoin Exchange-Traded Funds (ETFs) are experiencing their third consecutive day of outflows, failing to replenish their holdings and instead seeing significant capital withdrawals. This unexpected divergence raises a critical question for market observers: who is truly buying?

Spot ETFs See $770 Million Exodus Over Three Days, IBIT and FBTC Among Those Affected

As Bitcoin’s price ascended, the ETF landscape moved in the opposite direction. Data from Farside Investors reveals that US spot Bitcoin ETFs recorded net outflows of approximately $450.4 million on September 15th, followed by another $295.9 million on September 16th. Major players felt the impact, with BlackRock’s IBIT seeing a single-day withdrawal of about $144.1 million, ARK 21Shares’ ARKB losing $84.4 million, and Fidelity’s FBTC experiencing outflows of $52.7 million.

The latest figures for September 17th confirmed an additional net outflow of around $24.2 million, extending the withdrawal streak to three days and accumulating a total of approximately $770.5 million. This means that during Bitcoin’s rebound from its recent lows, the largest US-listed spot investment vehicles have not contributed new buying pressure but have remained in a state of net redemption.

Despite these outflows, US spot ETFs collectively still hold roughly 1.259 million BTC, representing nearly 6% of Bitcoin’s maximum supply of 21 million coins, with an asset value of approximately $96 billion. Consequently, ETF flows remain a crucial indicator for gauging institutional demand in the US.

If ETFs Are Selling, What’s Fueling This Bitcoin Rally?

The answer likely isn’t a single buyer, but rather a confluence of factors.

1. Derivatives Short Covering Ignites Upward Momentum

A significant portion of the upward movement can be attributed to short covering in the derivatives market. CoinGlass data for the 24-hour period ending September 17th shows roughly $346 million in leveraged crypto positions liquidated across the market. Critically, short liquidations accounted for about $196 million, surpassing long liquidations of $150 million. Specifically for Bitcoin, approximately $53.63 million in short positions were liquidated, significantly higher than the $32.17 million in long liquidations.

This implies that as Bitcoin’s price pushed past $76,000 towards $77,000, traders who had bet on further declines were forced to buy back their positions, generating additional ‘short covering’ momentum. The market previously had a concentrated short liquidation zone between $76,600 and $78,000, making it prone to a chain reaction of position closures once breached, thereby amplifying the speed of the rebound.

2. Improved Macroeconomic Sentiment Offers Risk Assets a Breather

A second driving force stems from an improvement in overall macroeconomic sentiment. The Federal Reserve recently raised its policy interest rate by 25 basis points to a range of 3.75% to 4.00%, maintaining a hawkish stance. However, contrary to expectations, post-hike, long-term US Treasury yields and oil prices actually retreated, leading to a recovery in US equities, particularly tech stocks.

Reuters highlighted that the global stock market rebound on September 17th was largely underpinned by falling oil prices and bond yields. Barron’s also noted that Bitcoin tracked the recovery in US stock futures on the same day, briefly climbing back to around $76,500.

Therefore, this current BTC rebound appears to be a combined effect of restored risk asset sentiment, short covering, and spot buying outside of ETFs, rather than being solely driven by renewed ETF capital inflows.

Is This “Whale Accumulation”? Not Yet, Data Suggests

It’s important to note that current data does not yet confirm this rebound as a large-scale accumulation by long-term institutional investors or “whales.” CryptoQuant recently indicated a significant slowdown in accumulation rates among Bitcoin’s largest holders, with some major holder groups even showing stagnant balances. When viewed alongside the continuous ETF outflows and price rebound, it’s crucial to avoid interpreting this price action as a new wave of institutional bottom-fishing.

Derivative market funding rates are currently around 0.01%, which doesn’t suggest an extreme surge in long leverage. This scenario more closely resembles a technical and liquidity repair originating from the $75,000 level. Whether Bitcoin can transform this rebound into a new upward trend, the $77,000 mark itself might not be the most critical observation point.

What’s Next? Key Indicators to Watch for a Sustained Recovery

Instead, two key factors warrant close attention:

1. Can BTC further reclaim the recently lost $78,000 to $80,000 range?
2. Can spot ETFs halt their consecutive capital withdrawals?

If prices continue to rise but US spot demand indicators, including ETFs and platforms like Coinbase, remain weak, it would suggest the rally is primarily fueled by short-term capital and derivatives. Conversely, if ETF capital inflows turn positive again, it would signal that this rebound is beginning to receive confirmation from significant spot funds, potentially indicating a more sustained recovery and renewed institutional confidence.