Bitcoin is trading near the $65,300 mark, while US spot Bitcoin Exchange-Traded Funds (ETFs) recorded a combined outflow of $465 million on July 23 and 24. The redemption volume reached $225.1 million on the first day and $240.08 million on the second, ending a seven-session series that had brought in nearly $1 billion the previous week.
These outflows were insufficient to reverse the overall trend into negative territory. Despite a small net inflow of $33.79 million for the week as a whole, late sales erased most, but not all, of the previous momentum. Bitcoin itself weathered the fund outflows with relative calm, fluctuating between $63,700 and $65,400 during this period before stabilizing around $65,000.
Furthermore, it's worth noting that US spot Bitcoin ETFs have lost over 160,000 BTC since their peak in October 2025—the most significant annual reduction since these products launched in January 2024.
The Cause of the Decline Was Leverage Use, Not a Mass Exodus of Funds
Ethra Invest CEO Saeed Al-Marri commented on a similar dynamic earlier this month, telling Forbes that Bitcoin's corrections are caused by forced selling, not a mass capital outflow from the asset. He added:
"Long positions are currently being liquidated six times more frequently than short positions (a 6-to-1 ratio), indicating the liquidation of bullish bets, not a mass exodus from this asset."
The figures support his statement: The mid-July drop led to $73.15 million in Bitcoin position liquidations in a single day, with $62.63 million coming from longs and only $10.52 million from shorts. This ratio of roughly six to one aligns with Al-Marri's assessment.
The macroeconomic picture further complicates the "bearish" interpretation. US net liquidity—a measure of cash available for investment in risky assets after accounting for the Federal Reserve's balance sheet, the Treasury General Account, and Reverse Repo (RRP) operations—has risen to approximately $5.92 trillion, increasing by over 3% in the past 12 weeks.
Analysts tracking this metric weekly place the current value in the 80th percentile of all weekly observations since 2003—a level historically associated with easier, not tighter, financial conditions.
The Reverse Repo facility, once a buffer capable of absorbing trillions in excess cash, is nearly depleted. Recent one-day RRP operation volumes have shrunk to a few hundred million dollars, a fraction of the facility's peak of $2.37 trillion recorded in September 2022. With this "cushion" gone, the additional liquidity now has nowhere to go but directly into markets, including Bitcoin and other risky assets, instead of sitting overnight at the Fed.
The next scheduled test for this position is on August 12, when the Bureau of Labor Statistics releases the Consumer Price Index (CPI) report for July. Traders note that this data is more likely to be the catalyst for Bitcoin's next real move, as high inflation readings would force the Federal Reserve to keep rates elevated for longer, tightening the very liquidity conditions that have been cushioning market pressure throughout this month.
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