ETF Inflows Ignite Bitcoin’s Rally Back to $65K, But Market Sentiment Remains 'Extreme Fear'

Bitcoin, after a lackluster July, demonstrated resilience in early August, regaining the $65,000 threshold on Friday (August 7), fueled by four consecutive days of capital inflows into U.S. spot Bitcoin ETFs.

Trading data shows that since August 3, 2026, spot ETFs have accumulated approximately $626 million in net inflows, led by BlackRock’s IBIT. This surge was supported by whale accumulation and reduced leveraged selling pressure, helping prices break through key resistance levels.

However, while August has seen inflows, they are modest compared to the massive outflows in Q2. SEC filings reveal that BlackRock’s Bitcoin and Ethereum ETFs experienced a net capital outflow of $3.5 billion in Q2—a stark contrast to the $13.9 billion growth during the same period last year. This suggests that recent inflows are merely patching the gap left by Q2’s large-scale redemptions, rather than establishing a strong upward foundation.

Market sentiment has not significantly improved alongside the price rebound. The 'Crypto Fear & Greed Index' remains in 'extreme fear' at 25. Additionally, trading volume shows a divergence—prices are rising while volume is falling. The 24-hour spot trading volume has dropped by about 16%, indicating a low-participation, low-conviction rally that could quickly fade.

Earlier, Strategy, the largest corporate holder, sold 1,638 bitcoins (worth approximately $104 million) between late July and early August to fulfill obligations.

Macroeconomic and regulatory conditions continue to weigh on the market. Bitcoin’s correlation with the S&P 500 index stands at 83.6%, showing its trajectory is heavily influenced by overall risk sentiment.

On the regulatory front, the CLARITY Act bill was delayed until September after failing to secure a vote before the Senate recess, increasing policy uncertainty.