Bitcoin ETFs Register $562M Inflows as Market Eyes $85K Recovery Despite Year-to-Date Losses

Bitcoin Tests Support at ETF Cost Basis as Fresh Capital Signals Potential Recovery

Bitcoin's dramatic weekend plunge below $75,000 has created a critical inflection point for the cryptocurrency markets, with the asset now trading below the average cost basis of spot ETF holders for the first time in months. However, Monday's decisive return to institutional buying—breaking a four-day outflow streak with $562 million in fresh capital—suggests that sophisticated investors view current prices as an accumulation opportunity rather than a reason to flee. The question now facing traders is whether this reversal in sentiment can fuel the squeeze toward $85,000 that technical indicators suggest is increasingly probable.

The confluence of technical setup, extreme market fear, and renewed institutional interest creates a potentially explosive environment for Bitcoin price action in early February, particularly if proposed U.S. crypto legislation provides the catalyst markets appear to be waiting for.

The Facts

Spot Bitcoin ETFs recorded $562 million in net inflows on Monday, ending four consecutive days of outflows and providing the strongest single day of February demand that already surpasses all of January's combined inflows ^[1]. Notably, not a single ETF experienced outflows during Monday's trading session, indicating broad-based institutional buying across all providers ^[1]. This reversal comes after a brutal week that saw $1.5 billion exit Bitcoin ETFs, contributing to year-to-date outflows totaling $1 billion as of Tuesday ^[2].

The inflows coincided with Bitcoin's recovery from a nine-month low of $74,500 reached on Monday, with the cryptocurrency rebounding approximately 5.5% and briefly touching $79,000 ^[1][2]. This weekend's price action created the largest CME futures gap of the current cycle, spanning from Friday's close around $84,445 to Monday's open near $77,400—a nearly $7,000 chasm that analyst Daan Crypto Trades described as "definitely the biggest weekend move in many months" ^[1].

Critically, Bitcoin's current price represents a 7.3% decline below the average ETF creation cost basis of $84,000, according to Galaxy Digital's head of research Alex Thorn, who noted that BTC traded as low as 10% below that level on Saturday ^[2]. "BTC hasn't traded below the average ETF create cost basis since summer and early fall 2024, when it reached as low as -9.9%. It's reasonable to expect this level to serve as near-term support," Thorn stated ^[2].

From a technical perspective, analysts identify multiple price targets for a potential rebound. After sweeping the previous monthly low at $84,000 and quarterly low around $80,000, Bitcoin faces two significant fair value gaps: the first between $79,000-$81,000 and a second between $84,000-$88,000 ^[1]. Exchange order-book data from CoinGlass reveals concentrated sell-order clusters at $80,000 and just above $85,000, creating potential targets for a liquidation squeeze that could force short sellers to close positions ^[1].

Market sentiment indicators show extreme fear gripping traders, with data from Santiment indicating that FUD (fear, uncertainty and doubt) levels reached their highest point since November 2025 during Bitcoin's descent to $74,600 ^[1]. The MVRV z-score has simultaneously reached its lowest level ever recorded, signaling what analysts describe as "fire-sale valuations for Bitcoin" ^[1]. Meanwhile, Ether ETFs continue to struggle, posting minor outflows of $2.9 million on Monday and failing to attract the institutional interest currently flowing back into Bitcoin ^[2].

Analysis & Context

The ETF cost basis of $84,000 now represents more than just a technical level—it's a psychological battleground that will likely determine Bitcoin's trajectory through February. When institutional investors find themselves underwater on their positions, historically, two scenarios typically unfold: either they capitulate and sell at a loss, accelerating declines, or they average down, viewing dips as buying opportunities. Monday's $562 million inflow strongly suggests the latter behavior is dominating, which bodes well for near-term price stability.

The historical pattern of Bitcoin finding support at or slightly below its realized price of $56,000 before bull markets, as noted by Thorn, provides important context for current price action. While BTC remains well above that threshold, the fact that it's testing ETF cost basis levels mirrors the summer 2024 correction, which ultimately resolved to the upside and led to new all-time highs. The difference today is the macroeconomic uncertainty surrounding Federal Reserve policy under incoming Chair Kevin Warsh and ongoing geopolitical tensions that create headwinds for risk assets broadly.

The technical setup for a squeeze toward $85,000 appears increasingly compelling. The massive CME gap, combined with fair value gaps and concentrated liquidity clusters, creates a roadmap for rapid price appreciation if Bitcoin can reclaim $80,000. The extreme fear readings from Santiment are particularly noteworthy, as previous instances of comparable FUD levels preceded relief rallies. Markets often bottom on maximum pessimism, and sentiment indicators suggest we may be approaching that inflection point. However, the catalyst for such a move remains unclear, with analyst AlphaBTC pointing to potential U.S. crypto legislation as a possible trigger.

The divergence between Bitcoin and Ethereum ETF flows deserves attention. While Bitcoin attracted half a billion dollars on Monday, Ether couldn't generate any institutional interest, highlighting Bitcoin's continued dominance as the preferred institutional crypto exposure. This suggests that the capital returning to crypto markets is discriminating, seeking the perceived safety and liquidity of Bitcoin rather than speculating across altcoins—a pattern typical of market bottoms where capital flows back into the highest-quality assets first.

Key Takeaways

• Bitcoin ETFs reversed a four-day outflow streak with $562 million in inflows on Monday, demonstrating renewed institutional appetite despite BTC trading 7.3% below the $84,000 ETF cost basis—a support level that hasn't been breached since summer 2024

• Technical indicators point toward a potential price squeeze toward $85,000, with the largest CME futures gap of the cycle, multiple fair value gaps, and concentrated liquidity clusters creating a roadmap for rapid appreciation if $80,000 is reclaimed

• Extreme fear sentiment readings have reached levels not seen since November 2025, while the MVRV z-score hit all-time lows—historically, these conditions have preceded relief rallies as markets bottom on maximum pessimism

• The divergence between Bitcoin's strong institutional inflows and Ethereum's continued outflows suggests quality-focused capital allocation typical of market bottoms, where investors seek the safety of the most established cryptocurrency first

• The $84,000 ETF cost basis level now serves as critical near-term support, with historical patterns suggesting institutional investors are more likely to average down at these levels than capitulate, particularly given Bitcoin's position well above its $56,000 realized price