US spot Bitcoin ETFs logged $201.9 million in net outflows in late August, specifically on the 28th. The daily withdrawal snapped a steady nine-day streak of institutional inflows. The reversal coincided with a hawkish speech by Fed Chair Kevin Warsh at the annual Jackson Hole economic symposium.
Over the previous eight trading sessions, US spot Bitcoin ETF products attracted approximately $2.8 billion in total institutional capital. These inflows drove Bitcoin’s price up from around $63,500 to break past $80,000, briefly touching a peak of $81,000. After failing to sustain its position above the $80,000 mark, the largest cryptocurrency promptly corrected to $77,500 on August 29.
Price Rally Driven Without Leverage
BTC futures open interest contracted from around 646,000 BTC in mid-August to 588,000 BTC. This decline in open contracts demonstrates that the earlier price rally above $80,000 was purely driven by spot buying rather than debt-fueled speculation. According to a note from QCP Capital, “short covering and spot demand played a bigger role than new leveraged longs.”
Interest Rate Signals and Government Bonds
Bitcoin’s price correction coincided with Kevin Warsh’s firm stance at Jackson Hole. Warsh emphasized that the primary focus of Fed policymakers must remain on price stability, noting that financial conditions could hardly be described as tight. Even before the speech, market participants had already priced in a 35% probability of another rate hike in September.
Inflation figures align with the US central bank’s firm stance. The headline Personal Consumption Expenditures (PCE) price index for July stood at 3.7% YoY, while core PCE came in at 3.3% - both metrics still exceed the Fed’s 2% target. On the fiscal front, starting September 9, the US Treasury will increase long-term bond buyback operations from a maximum of $2 billion to a minimum of $4 billion per operation. The government has framed this buyback move as purely operational rather than a quantitative easing (QE) program, meaning it has no direct connection to continuing Bitcoin’s rally.
Ethereum ETFs Continue to Attract Capital
While Bitcoin ETFs recorded daily outflows, Ethereum ETFs extended their uninterrupted inflow streak to a 10th day. Fresh capital flowing into Ethereum investment products managed to rival Bitcoin’s daily intake on the same day, even though Ethereum’s total asset base is significantly smaller.
The $201.9 million outflow from Bitcoin instruments in a single session is not yet enough to confirm a permanent downward trend reversal. Analysts require further confirmation from fund flows over the coming days to determine whether institutional liquidity is truly exiting the market or simply taking temporary cover.
Reported by Decrypt.
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Previously: Bitcoin ETFs Shed $201.8 Million to Snap 9-Day Streak - Jackson Hole Speech the Primary Trigger
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
